Hayes Questions Negative Bitcoin Funding Rates Despite 100% Pump Post FTX

Key Insights

• Arthur Hayes took to Twitter earlier today, to share his thoughts via a tweet
• Hayes asked why Perpetual funding rates have remained negative despite Bitcoin’s pump since the crash that followed the FTX crash last year
• A good theory may be that short-term traders are using Bitcoin’s “impressive” price increase since the FTX crash as an opportunity to liquidate their positions.
• Another is that people are still conditioned to short/hedge the bounces, explaining why the funding rates on Bitcoin are still negative.

American entrepreneur, co-founder and former CEO of cryptocurrency exchange BitMEX, Arthur Hayes took to Twitter earlier today, to share his thoughts via a tweet.

Any theories as to why after an almost 100% pump in $BTC post FTX, perp funding is still negative? What cohort in the market is supplying the marginal sell pressure? pic.twitter.com/X2Cejiz7et

— Arthur Hayes (@CryptoHayes) April 13, 2023

Hayes drew attention to something that didn’t quite add up In the crypto market’s trend, particularly in the case of Bitcoin.

Hayes asked why Perpetual funding rates have remained negative despite Bitcoin’s pump of more than 100% ever since the crash that followed SBF’s FTX collapse.

“Any theories as to why after an almost 100% pump in $BTC post-FTX, perp funding is still negative?” Hayes began in the tweet. “ What cohort in the market is supplying the marginal sell pressure?”

This is an interesting question that takes some brain-wracking to understand.

Where Is The Marginal Selling Pressure Coming From?

In simple terms, Hayes is asking why the perpetual funding rate in the Bitcoin market shows that the market is still mostly bearish, and yet the price of Bitcoin has moved up so quickly (even gaining more than twice its original value after the crash).

This circumstance makes one wonder where the marginal bearishness that is supposed to be countering the Bitcoin bulls is coming from.

To be fair, this question is a pretty valid one: Where is the marginal selling pressure coming from?

In order to answer this question, it might be easier to draw up a few hypotheses.

The most prominent of these theories may be that short-term traders are using Bitcoin’s “impressive” price increase since the FTX crash as an opportunity to liquidate their positions, temporarily shifting the balance of power from buyers to sellers.

This selling pressure may last for a short while, at least until additional investors come onto the market and turn the funding rates positive again.

Another theory by a commenter named Pascal Tilgner under Hayes’ tweet is that “people are still conditioned to short/hedge the bounces”. This, according to Tilgner, explains the negative funding rates.

My theory: People still conditioned to short/hedge the bounces. Same in equities, investors prepared for the worst, which is why it is not happening. Just a theory though..

— Pascal Tilgner 🦇🔊 (@pascaltilgner) April 13, 2023

Tilgner went on to say that the same applies to equities, and investors are “prepared for the worst.”

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