Rising funding rates on Binance have increased the risk of a BTC price correction.
The Bitcoin (BTC) price temporarily dipped to $102,000, but Binance data shows that futures funding rates reached an all-time high of 0.01. This situation indicates an increase in long positions despite the price decline, indicating continued optimism among derivatives traders. They are holding or even increasing long positions, anticipating a quick market rebound. This is precisely what ultimately happened. Today, Bitcoin is trading in a range of $110,000 to $114,000.
Under normal conditions, a price decline is accompanied by lower financing rates as participants close long positions. But the current dynamics indicate the opposite: traders are buying into the dip, confident it will be temporary. This reflects the market's psychological state, where confidence in a continued bullish trend outweighs caution.
Rising financing rates amid falling prices create pressure. Holding long positions becomes expensive, which over time can force traders to close them at a loss, exacerbating the downward movement. This increases the likelihood of cascading liquidations if the expected recovery fails to materialize.
At the same time, there's no active spot buying on the market. Most activity is concentrated in futures, making rising rates the result of speculative rather than fundamental demand. This structure increases the risk of sharp fluctuations and reduces price stability.
Experts note that such a divergence between the behavior of futures and spot participants often precedes sharp price corrections. If the balance between funding and price is not restored, the market could face a new downturn.
An alternative scenario is a short-term rebound in Bitcoin's price, which would level out rates and partially satisfy market expectations. However, fundamental signals indicate that the likelihood of prolonged consolidation and further decline remains high until funding returns to neutral levels.
Source: cryptonews.net
