Bitcoin traders appear to be ratcheting up bets on a fresh rally, and they’re taking on more leverage – and risk – in cryptocurrency derivatives markets.
In the past few days, the cost to fund a long position in the market for bitcoin (BTC) perpetual swaps, a type of derivatives in cryptocurrency markets similar to futures contracts in traditional markets, has broken above neutral levels for the first time since mid-March, according to Arcane Research, a Norwegian analysis firm.
The average cost is now pushing toward 0.08%. That’s still well below a level close to 0.12% witnessed earlier this month when bitcoin surged to an all-time high price above $61,000, or earlier in the year, when the funding cost was roughly twice as high.
But the recent rise appears to show traders finding a renewed appetite for risk taking following a market shakeout over the past couple of weeks. Bitcoin’s price fell to just above $50,000 as recently as March 25.
“The funding rate spikes coincide with strong optimism and high leverage from short-term traders,” according to the Arcane report.