CoinVoice has recently learned that, according to Bloomberg, after Bitcoin reached an all-time high, some traders are seeking to hedge against deeper pullback risks. Funding rates are a key metric for gauging leverage in the cryptocurrency market, and they are currently approaching historical highs.
This data indicates that traders are willing to pay a high premium to increase the leverage of their long positions, and perpetual contracts are one of the most commonly used products for investors to double down on the directional movement of Bitcoin prices. As previous bull markets have demonstrated, elevated funding rates may set the stage for a pullback.
Nathanaël Cohen, co-founder of the digital asset hedge fund INDIGO Fund, stated that funding rates are a good way to assess how overheated the market is, but they can also be very dangerous, as they may remain elevated longer than expected. [Original link]
