The rise in the bitcoin rate above $ 63,000 has strengthened the bullish expectations of market participants. The premium or overpayment rate on three-month futures is approaching 50% on an annualized basis. According to analysts at Arcane Research, this indicates a high demand from traders for long positions, which will allow them to benefit if the price of bitcoin continues to rise.
“The current premiums of the retail-oriented exchanges are at the highest values we have ever observed,” writes Arcane Research.
For context, the overpayment on the Chicago Mercantile Exchange (CME), focused on serving institutional investors, is about 10% year on year, while on FTX, BitMEX and Deribit it is several times higher than this value.
As a reason, in addition to the rush demand of traders, analysts point to the low liquidity of retail exchanges. The growth in premiums has accelerated since March 25, when the price of bitcoin, after a 20 percent decline, reached a local low of about $ 50,000. At this level, sellers limited pressure on the market, which ultimately led to a breakout of the previous all-time high on Tuesday.
Funding rates for perpetual contracts also skyrocketed, confirming previous observations. In other words, traders tend to be long, even if it is costly to maintain them.
“Most perpetual contracts are now trading at significant premiums to the spot price,” analysts say. “Leverage is an essential ingredient in the liquidation recipe, and we wouldn’t be surprised to see an influx of long liquidations soon follow.”
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