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Daily Bitcoin On-Chain Snap #3

Exclusive Research

Funding Rates Turn Negative Amid Major Quarterly Expiry

The funding rate is the cost of funding long positions in the market for bitcoin perpetual swaps. When the rate is positive, long positions pay short positions for leverage and vice versa. Glassdoor data above shows that the funding rate has been largely positive for the bulk of the recovery in Q3. However, funding rates turned negative in recent days in response to fear and uncertainty around the quarterly expiry. The question now is how long do funding rates remain negative. Monitor price action around the max-pain point of $42,000, as any large deviations in either direction will be reflected in funding rates as traders tap into leverage.

~80% of BTC Addresses in Profit - Expect Trend to Continue

Despite the heavy sell-off over the last few days, long-term BTC holders continue to HODL. More importantly, the sharp decline from May's sell-off means that over 70% of addresses are still in profit. The data can be further filtered to deduce that new buyers represent 10-25% of BTC addresses given the muted effect of a large 50% drawdown on overall profitability. Another inference is that the majority of addresses with meaningful BTC exposure have a cost basis well below the year’s range of $30-60K. This incentivises them to hold, as their returns are exponentially higher than new entrants.

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