Holding a long position in Bitcoin futures has become twice as expensive. The funding rate on Binance perpetual futures has risen to 0.01. This is the highest in more than two months. Over the past day, positions worth over $430 million were forcibly closed on the market, and these were mostly longs.
A perpetual futures contract is a contract on the price of an asset with no expiration date. To keep its price from drifting too far from the spot price, the parties regularly pay each other. This payment is called the funding rate.
For a leveraged trader, this is a direct expense. The more expensive it is to hold a long, the faster the position eats into the margin and gets forcibly closed.
How big is the skew?
The current value is more than double the 30-day average of 0.0046. The figures were cited by a CryptoQuant analyst under the pseudonym Arab Chain. Meanwhile, BTC is trading around $77,000.
- 0.01 - the funding rate on Binance right now
- 0.0046 - the 30-day average
- over $430 million - liquidations in a day
- around $77,000 - the BTC price
The funding rate is a regular payment between those betting on a rise and those betting on a fall; this is how the futures price is kept close to the spot price. A positive value means that long positions pay short positions, i.e., buyers have the upper hand in futures.
Why does this fuel a cascade?
The stronger this skew, the more fuel for a cascade. A liquidation is the forced closing of a leveraged position when the margin is insufficient. One closure pushes the price down and pulls the next positions toward liquidation.
Blogger Coin22 points out that those very $430 million were wiped out precisely at a positive funding rate. He looks to the $80,000 level as resistance and $75,000 as support.
The main point: demand for leverage is not confirmed by activity in the network itself. The average number of active Bitcoin addresses over 30 days has fallen to 629,000, which is 43% below the December 2024 peak. These data were cited by CryptoQuant analyst Axel Adler Jr., and he does not yet see a sustained recovery.
What's next?
BitMEX co-founder Arthur Hayes expects BTC weakness. He believes this will last until the Fed or banks start expanding their balance sheets.
- Hayes has exited risk. He himself has already closed his risky trades, even though on October 15 he publicly urged betting on BTC and ETH growth.
- Central bank balance sheets. The dates of Fed decisions can be seen in advance in the economic calendar.
- BTC levels. Coin22's reference points: $80,000 on top and $75,000 on the bottom.
For a trader, the takeaway is simple. Expensive funding and a weak network are a bad pair for holding a long with high leverage.
Did you hold a leveraged long during these days?
People take leverage on a small deposit out of desperation. Without it, a 3% move in BTC turns into an amount for a food delivery. Those $430 million that were wiped out in a day were made up of exactly such positions. In prop trading, trade size is backed by the company's capital, and there is no longer any need to crank leverage to the limit. It is calmer to study how the path from selection to payout works before the next such purge.