Following Bitcoin's all-time high, futures traders engaged in excessive long position bets, leading to a funding rate of 0.06-0.08%, indicating market overheating.
However, as the price adjusted, a massive $42 million worth of long positions were liquidated, and the overheated leverage was relieved, causing the funding rate to drop to 0.008%. This suggests that traders holding long positions experienced extreme fear due to losses.
Interestingly, as large-scale leveraged futures positions were liquidated and prices fell, futures traders conversely bet on short positions. However, the Coinbase premium index showed that U.S. investors were buying spot coins again, leading to a new all-time high of $90k.
Short-term traders are highly sensitive to market fluctuations, but they tend to move in the opposite direction of their bets. When predicting price fluctuations, if you trade opposite to what futures traders are betting on, you are less likely to lose.
Written by MAC_D
