The cryptocurrency space can be very competitive in terms of every coin trying to take advantage of the increasing volatility to gain revenue. Bitcoin, the largest cryptocurrency, has experienced huge volatility, and it proved to be a double-edged sword for cryptocurrencies because it fell by more than 10% within an hour after a huge surge. However, this volatility helps traders in the market actively participate and form an active, bullish market.
As the target of BTC goes up, the premium on futures also soars. This trend also continued this week. According to data provided by Arcane, the current trading premium of CME Premium is greater than that of retail exchanges. In the past week, the Chicago Mercantile Exchange’s September premium income increased from 2.05% to 2.76%.
This shows that institutions are still optimistic about BTC, and even the open positions on the platform hit a record high of US$828 million, pushing CME to the third place with the most interest in BTC futures on the exchange.
Insurance rates on retail exchanges also increased last week. As of September 2020, the total premium rate of retail exchanges is 2.25%. According to the chart, BitMEX, Deribit, FTX and Kraken jointly pointed out that the premium rate has increased by 15.59%.
Similarly, the funding rate also increases as prices increase. The funding rate is a tool to ensure that the price of a perpetual swap remains close to the price of its underlying asset. As the transaction price of the perpetual contract is higher than the BTC spot price, the financing rate also soared this week.
According to data, as investors seek to withstand upside risks through leverage, Binance’s financing interest rate reached a peak of 0.14%. However, the decline over the weekend caused interest rates to fall to a normal state of about 0.01%.
Despite the ups and downs of the BTC spot market, the rise in premiums and funding rates are signs of market health. It shows that the market is stabilizing, and the financing rate also shows that the leveraged bulls are on a downward trend.