Bitcoin funding rates in 2023 displayed notable volatility, reflecting the dynamic nature of the cryptocurrency market throughout the year. The average 8-hour funding rates fluctuated significantly, ranging from negative values to peaks exceeding 0.04% in some periods.
The first quarter of 2023 saw Bitcoin funding rates reflecting a mix of optimism and caution. January started with a relatively high average rate of 0.00629%, indicating bullish sentiment. The month witnessed significant daily fluctuations, with rates reaching as high as 0.0168% on January 1st and dipping to -0.0135% on January 13th.
February maintained a bullish trend with an increased average rate of 0.00893%. The month was characterized by consistently positive rates, often hitting the 0.01% mark. This period coincided with Bitcoin's price recovery, surpassing $23,000 mid-month.
March experienced a slight cooling of sentiment, with the average rate decreasing to 0.00655%. However, the month saw some of the highest daily rates of the quarter, peaking at 0.0156% on March 15th. This spike aligned with Bitcoin briefly touching $26,000 amidst banking sector uncertainties, particularly the collapse of Silicon Valley Bank.
The second quarter maintained positive funding rates, albeit with some moderation. April began with an average rate of 0.00557%, slightly lower than the previous month. The daily rates showed less volatility compared to Q1, with most days staying within the 0.003% to 0.009% range.
May saw a marginal increase in the average rate to 0.00601%. The month started strong with rates consistently above 0.005% in the first week, coinciding with Bitcoin's push towards $30,000. However, the latter half of the month saw more subdued rates, reflecting market uncertainty.
June marked an uptick in bullish sentiment, with the average rate rising to 0.00715%. The month witnessed several days with rates at or near 0.01%, particularly in the latter half. This period aligned with renewed interest in Bitcoin, partly fueled by BlackRock's filing for a spot Bitcoin ETF.
The third quarter began with a continuation of positive but moderated funding rates. July's average rate stood at 0.00606%, with daily rates generally fluctuating between 0.002% and 0.01%. The relatively stable rates mirrored Bitcoin's price consolidation around the $30,000 mark.
August maintained a similar trend with an average rate of 0.00594%. The first half of the month saw several days with rates at or near 0.01%, indicating sustained optimism. However, the latter half experienced a notable shift, with rates dropping significantly, even turning negative on some days. This change coincided with Bitcoin's price decline below $26,000.
September marked a significant drop in funding rates, with the monthly average plummeting to 0.00199%. This was the lowest monthly average of the year, reflecting increased market pessimism. The month saw multiple days with negative rates, particularly in the middle of the month when Bitcoin's price struggled to maintain support above $25,000.
The final quarter of 2023 witnessed a dramatic shift in funding rates, mirroring Bitcoin's strong price performance. October started cautiously with an average rate of 0.00515%, but daily rates began to climb steadily throughout the month. By the end of October, rates consistently hit 0.01%, coinciding with Bitcoin's break above $30,000.
November saw a significant surge in bullish sentiment, with the average rate more than doubling to 0.0126%. The month experienced some of the highest daily rates of the year, peaking at 0.0276% on November 13th. This period aligned with Bitcoin's rapid ascent, breaking through $35,000 and approaching $40,000.
December marked the culmination of the year's bullish trend, with the average funding rate reaching a yearly high of 0.0195%. The month witnessed unprecedented daily rates, particularly in its latter half. December 29th saw an extraordinary rate of 0.0499%, the highest of the year, as Bitcoin surged past $40,000 and approached $45,000. This extreme bullish sentiment reflected the market's excitement over the potential approval of spot Bitcoin ETFs and the anticipation of the 2024 halving event.
The year 2023 demonstrated the dynamic nature of Bitcoin funding rates, from the cautious optimism of Q1 to the summer lull in Q3, and finally to the explosive rally in Q4. These fluctuations provided valuable insights into market sentiment throughout Bitcoin's journey from the $16,000 level at the start of the year to over $40,000 by year's end.
