• Recently, the spread between perpetual funding in bitcoin and ether markets collapsed. This indicates an increase in risk appetite among investors.
  • This suggests that alternative cryptocurrencies will continue to outperform traditional cryptocurrencies in the future.

Crypto bulls who are unsure about the future of the recent gains in altcoins cryptocurrencies including memecoins may want to consider the most recent trend in the spread in funding rates between bitcoin and Ethereum.

BTC Price Index and Live Chart – CoinDesk”>(BTC). Investors are now willing to take on more risk by investing in smaller altcoins that have a higher chance of making a profit.

The spread between BTC funding rates and ETH is increasing. Before October-2023, the spread fluctuated between a positive and negative state, Glassnode stated in its weekly newsletter.

Glassnode said that since the October rally funding rates for ETH were consistently higher than BTC. This indicates an increased appetite among traders to speculate farther out on the curve of risk.

Bitcoin is by far the largest cryptocurrency in the world, based on market capitalization. It’s also the most liquid. And it has a growing adoption among mainstream users. Ether is considered to have a high beta, and it’s an altcoin that leads the pack. The price or funding rate difference in bitcoin and the ether market reflects a broader risk perception, just as the JPY/AUD pair in traditional markets.

Perpetuals, or futures with no expiry date, include a mechanism for funding rates so that the prices of perpetuals closely track spot prices. Positive funding rates indicate that leverage is on the bullish side and long positions are willing to pay for shorts in order to keep their bets active. A negative rate indicates the opposite.

Spread between Bitcoin and Ethereum Funding Rates. (Glassnode) (Glassnode)

In the first nine month of 2023, the spread between bitcoin and ether funding rates hovered around -3%. Since October, there have been several short drops below -3 %, indicating a bias towards ether and altcoins in general.

Ether and other altcoins are leading the rise in total crypto market capitalization. According to TradingView, Bitcoin’s dominance rate in the market has been between 51% and 54 % since January. The total crypto-market capitalization increased from approximately $1.7 trillion to around $2.2 trillion in that time.

Parikshit Miishra is the editor.