Bitcoin back above $100,000 amid rising futures funding rates

Bitcoin perpetual futures funding rate has increased in the past 8-hour contract cycle. Image: Coinglass.

QCP Capital analysts observed current dynamics in the derivatives market, highlighting signs of growing market exuberance. They noted that during bitcoin's initial breach of $100,000 on December 5, perpetual futures funding rates also surged sharply.

"However, funding levels remain healthy this time round, and we do not anticipate a squeeze higher in the near term," the analysts stated.

In their Monday report, QCP Capital downplayed the likelihood of any significant Trump-related catalysts for the cryptocurrency market until after his January 20 inauguration.

"Front-end vols have remained soft with a relatively neutral skew which indicate a similar sentiment," they said. The subdued front-end volatility and balanced options skew suggest the market currently holds no strong directional bias in the short term.

Cryptocurrency derivatives trader Gordon Grant highlighted the significance of bitcoin’s recent breakout, also pointing to derivatives metrics.

"Once again, for the third year running, we’ve seen unusual ‘high alpha’ flow in short-dated bitcoin calls for the week of January 10," Grant told The Block. He noted that over 1,000 units of January 7 calls at the $103,000 strike traded during a steadily rising weekend. "Analysis previously conducted by the street suggests that there may be statistically robust alpha in such prints," he added.

Grant drew comparisons to early 2023 when similar activity in short-dated calls preceded bitcoin’s explosive rally from the upper teens to mid-$20,000s, driven by a rapid repricing of volatility from between 20 and 30% to over 60%.

"Many market makers still remember the blistering velocity of that move," he said.

He also pointed to January 2024, when heavy call activity ahead of iBIT’s January 10 launch spurred gains from $40,000 to $48,000.

"The tape certainly appears to be rhyming a bit, especially with Trump inauguration as a near-term inflection point in some traders’ minds," said Grant, noting that options term structure showed a premium for post-inaugural dates, which could reflect traders pricing in potential market-moving events or gamma-driven positioning.

The cryptocurrency derivatives trader noted that the key question now is whether this marks the start of a sustained 2025 bitcoin rally or if it’s just short-term excitement fuelled by speculative bets on another Trump-related event, similar to what happened at last July's Bitcoin Nashville event.

"The term structure of vol and skew seems to argue that players are looking for more secular gains this year than just a week-one pop," Grant said.

Meanwhile, cryptocurrency short liquidations surged over the past 24 hours. Coinglass data revealed that out of over $175 million in liquidated positions, more than $108 million were short liquidations. Specifically, bitcoin accounted for over $36 million of these liquidations, signaling a strong upward pressure on prices.