Optimistic Crypto Market Sentiment Unfazed by Bitcoin Slump: CoinDesk 20 Futures Analysis

• Crypto Market Shows Optimism Despite Bitcoin's Recent Decline
• Understanding Perpetual Futures
• The Positive Funding Rate and Market Expectations
• Introduction of the CD20 Index
• Trading Volume of CD20 Perpetual Contracts
• Positive Sentiment Across Other Cryptocurrencies

Crypto Market Shows Optimism Despite Bitcoin's Recent Decline

Despite the recent 10% decrease in market value for Bitcoin$42,260 -0.64% (BTC), the premier digital asset by market value, following the introduction of spot ETFs in the U.S. a week past, the wider crypto market continues to show a positive outlook. This sentiment comes from the Bullish exchange's perpetual futures market associated with the CD20 index, which saw positive funding rates in the early hours of Thursday. Bullish is the owner of CD20.

Understanding Perpetual Futures

Perpetuals are futures that have no end point. They are governed by a funding rate system that involves periodic transfers between long (buy) and short (sell) traders. This ensures that the price of the perpetual is in alignment with the underlying index price.

When the funding rate is positive, this suggests that perpetual contracts are being traded at a premium compared to the index price. This prompts those with long positions to pay funding fees to those with short positions, which in turn indicates a bullish market expectation. A negative rate would suggest the opposite.

The Positive Funding Rate and Market Expectations

On Thursday at 06:50 UTC, the funding rate for the USDC-denominated CD20 perpetual futures stood at 0.0175%. This suggests that leverage is inclined toward the bullish side. The crypto exchange Bullish, calculates the funding rate every hour and debits or credits the appropriate amount from user accounts based on their positions.

Introduction of the CD20 Index

Trading Volume of CD20 Perpetual Contracts

Since the establishment of the CD20, Bullish's perpetual contracts have seen a trading volume near $18.11 million. This figure was determined by multiplying the 24-hour volume by the index price.

Positive Sentiment Across Other Cryptocurrencies

The optimistic sentiment seen in the CD20 perpetual futures also aligns with the positioning in perpetual futures for individual cryptocurrencies. According to data from Velo, the annualized funding rates in perpetual futures tied to the top 25 cryptocurrencies by market cap, and traded on major exchanges like Binance, have been consistently positive. This rate has hovered around 10% to 12% since last Thursday. These exchanges typically collect funding fees every eight hours. This pattern is also observed in mid-cap tokens.

Edited by Jonathan Stoker