Interest per week
Interest per year
Bitcoin could soon witness another major price move in either direction. According to crypto analyst "Rptr45," the funding rate on the BitMEX exchange has been in the 0.01 percent / 0.03 percent range for the past eight days, the longest streak since October 2018.
The Bitcoin price tanked by more than 40 percent just one month after that eight-day period. If history is any guide, this scenario could very likely repeat in 2019.
Bitcoin funding rates on BitMEX, explained
BitMEX, the leading crypto derivatives exchange, charges its accounts with funding rates every eight hours. The size of these rates depends on the demand and supply of XBT/USD. Traders are supposed to pay a funding fee based on their market position.
For example, those who are long on Bitcoin will have to pay a funding fee of 0.01% (or vice versa if the funding rate is negative). It has been proven that traders do not tend to close their positions to avoid paying more fees.
This time it might be different
That said, the funding rate on BitMEX might not be a reliable indicator for predicting Bitcoin's future price action. Despite still boasting gargantuan trading volumes, BitMEX is not as influential in the crypto industry as it was at the end of 2019.
Moreover, according to crypto researcher Daniel Stasek, the size of the funding rate might continue to decline since there would be no need for BitMEX to equalize the supply/demand ratio due to the asset's declining volatility.
As reported by U.Today, trading volumes recently plunged on BitMEX, Coinbase and other top-tier cryptocurrency exchanges, which is yet another sign of an imminent Bitcoin price move.