Bitcoin funding rates in 2022 exhibited significant volatility, reflecting the tumultuous nature of the cryptocurrency market throughout the year. The average 8-hour funding rates ranged from strongly negative values to positive peaks, showcasing the shifting sentiment in the Bitcoin futures market.
The first quarter of 2022 saw Bitcoin funding rates reflecting the market's uncertainty. January started with a relatively high average rate of 0.00560%, indicating initial optimism. The month witnessed significant daily fluctuations, with rates consistently at 0.01% for the first nine days before dropping sharply, reaching a low of -0.00909% on January 27th.
February experienced a cooling of sentiment with the average rate decreasing to 0.00150%. The month was marked by high volatility, with rates swinging from -0.0142% on February 1st to 0.01% on February 16th and 17th. This volatility coincided with Bitcoin's price fluctuations between $33,000 and $44,000.
March saw a resurgence in positive sentiment, with the average rate climbing to 0.00482%. The month ended strongly, with rates reaching 0.00915% on March 31st, reflecting growing optimism as Bitcoin's price stabilized above $45,000.
The second quarter maintained generally positive funding rates, despite significant market events. April began with an average rate of 0.00342%, slightly lower than March. The first week saw consistently high rates, often at or near 0.01%, coinciding with Bitcoin holding above $40,000.
May initially continued the positive trend with an average rate of 0.00435%. However, the month saw extreme volatility, with rates plummeting to -0.02186% on May 12th, the lowest point of the year, coinciding with the TerraUSD (UST) collapse and Bitcoin's price drop below $30,000.
June marked a slight decrease in the average rate to 0.00354%, reflecting the market's cautious sentiment following May's events. The month saw less extreme fluctuations, with rates generally staying between -0.00322% and 0.01%.
The third quarter began with a surge in positive sentiment. July's average rate jumped to 0.00674%, the highest monthly average of the year. The month saw consistently high rates, often reaching the 0.01% level, particularly in the latter half, as Bitcoin's price recovered to around $24,000.
August maintained a positive but more moderate average rate of 0.00307%. The month started strong but experienced a dip in the latter half, with rates turning negative on several days, reflecting Bitcoin's struggle to maintain support above $20,000.
September showed a slight improvement with an average rate of 0.00357%. The month saw less volatility compared to August, with rates generally fluctuating between 0% and 0.00759%, mirroring Bitcoin's relatively stable price range between $18,000 and $22,000.
The final quarter of 2022 witnessed significant turmoil in the crypto markets, reflected in the volatile funding rates. October started positively with an average rate of 0.00509%, the second-highest monthly average of the year. Rates frequently approached or hit 0.01%, indicating optimism as Bitcoin held steady around $20,000.
November saw a dramatic shift, with the average rate plunging to -0.00585%, the only negative monthly average of the year. This sharp downturn was primarily due to the FTX exchange collapse, with rates hitting an extreme low of -0.07852% on November 10th. This period coincided with Bitcoin's price dropping below $16,000, marking the lowest point of the year.
December showed signs of recovery with the average rate returning to positive territory at 0.00266%. While the month started with negative rates, it ended on a high note, with the rate reaching 0.0195% on December 31st, the highest daily rate of the year. This upturn aligned with Bitcoin's price recovering to around $16,500 by year-end.
The year 2022 demonstrated the highly reactive nature of Bitcoin funding rates to market events and sentiment. From the initial optimism in January to the Terra/LUNA crash in May, the summer recovery, and the FTX-induced turmoil in November, funding rates provided a clear reflection of the market's roller-coaster journey throughout this challenging year for cryptocurrencies.
