Bitcoin enthusiasts and traders had a remarkable start to the week as the leading cryptocurrency broke above $45,000 for the first time since April 2022. The rise also triggered altcoin prices. However, this upward momentum, along with funding rates, has come at a cost for those holding long positions in the perpetual futures market. It reached an unprecedented 66% on a yearly basis during Asian trading hours.
Matrixport: Funding rates are at 66 percent
According to data provided by leading crypto services provider Matrixport, global average permanent funding rates have risen to an all-time high of 66% on an annualized basis. Perpetual contracts, which are futures contracts with no expiration date, use the funding rate mechanism to align their prices with the current market value of the cryptocurrency. Positive funding rates imply that long positions are trading at a premium to the spot price, and long positions require shorts to pay out to maintain their positions.
Markus Thielen, Head of Research and Strategy at Matrixport, commented on the situation: “This morning, the funding rate reaches a new high of +66%. “This means long-term investments pay short-term 66% per year to stay long.” The continuous increase in the funding rate throughout the year-end holiday season indicates that an upward trend prevails in the market.
Bullish forecast for Bitcoin
Matrixport, a leading financial institution, predicts a massive increase in the value of Bitcoin, predicting that it will hit $50,000 in January. The forecast is based on several factors, including upcoming Bitcoin spot ETF approvals, institutional investments, supply constraints, and historical market trends. The financial institution notes Bitcoin’s scarcity on exchanges, with a significant portion remaining dormant over the past year. This scarcity, combined with factors such as potential ETF approvals and the Federal Reserve Chairman’s dovish stance, is setting the stage for a significant increase in Bitcoin’s value.
As Bitcoin continues to trade above $45,000 and expectations for ETF approval grow, Matrixport remains confident in its $50,000 Bitcoin prediction. Despite concerns about significant inflows from fiat into crypto, the lack of selling pressure and intense market compression could pave the way for even higher trading levels in the near future.
Bitcoin rises to $125,000, altcoin season is here
Matrixport also highlights Bitcoin’s historical behavior, highlighting its flexibility and tendency to rise during halving cycles in line with the US election cycle. Drawing parallels between Bitcoin’s performance in election years over the last six decades and the performance of US stocks, they predict an uptrend and set their sights on a staggering target of $125,000. Moreover, persistently high funding rates during the holiday season point to an unwavering bullish sentiment among crypto investors, reflecting the expectation of imminent ETF approval and signaling a potential move into the highly anticipated altcoin season.
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