Healthy Market Structure
Compared to last week’s extravaganza, funding rates have fallen in the last few days. But market sentiment is still very much a bull-dominated one. The above chart is the average funding rate per day to be paid every 8 hours (multiply by 3 for daily average funding). While funding has drifted negative for small periods, the average funding a trader has been paying has still been positive.
It’s difficult to say “funding has reset” in conditions where negative funding rates are immediately met by an influx of longs. Given current sentiment, it’s not surprising that the bulls are slurping up every dip they find. However, this implies a higher degree of long leverage, and so yet another “long squeeze” can’t be ruled out.