Let’s talk about the impact of funding rates on the market. There are still many friends who don’t even know what funding rates are.

Currently in the trading market, funding rates are soaring like crazy, with annual interest rates exceeding 100%.

The reason is that most traders are buying. Imagine this scenario: There are 10 traders in the market, 8 of them are buying.

This makes the orders you want to sell become scarce, making it difficult to match transactions. In order to attract people to sell and balance the market, the reward for selling will be increased.

Therefore, the more people buy, the fewer people want to sell, the funding rate will naturally be higher, and the arbitrage profits will be greater. But why are rates so high and prices still rising? This is actually because prices are determined by the supply and demand relationship between buyers and sellers.

The recent price increase is mainly due to the continued buying of Bitcoin ETFs in U.S. stocks, and the increase in buying orders in the spot market.

The high funding rate is mainly caused by the imbalance between buyers and sellers in the contract market. This is the phenomenon of a new market where the old trading rules no longer apply.

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