Crypto Market Surges as Bitcoin Hits $20,000, but High Funding Rates May Lead to Pullback

• The crypto market has had a bullish run in the start of 2023, with Bitcoin gaining 17% and surpassing $20,000.
• Crypto Quant contributor Maartun has noted that Bitcoin’s high funding rates usually result in a price pullback.
• Funding rates are payments made to traders maintaining the price of perpetual contracts close to the spot price of an asset.

The start of 2023 has brought much excitement to the crypto market as several assets have experienced significant profits in the last few days. Bitcoin, the world’s biggest digital asset and market leader, has been the top-performing coin, surging past the $20,000 price mark for the first time since the start of the FTX crisis. The coin has gained approximately 17% over the last seven days, resulting in much enthusiasm and a rise in the positive sentiment around the entire crypto market.

However, investors are being warned to be alert as Bitcoin’s high funding rates may lead to a price pullback. Funding rates refer to recurring payments made to either traders in a long or short position, depending on the difference between perpetual contract markets and spot prices. These payments are meant to keep the price of perpetual contracts near the spot price of an asset, in this case, Bitcoin. Maartun, a top analyst on the crypto analytics platform Crypto Quant, has noted that Bitcoin funding rates have attained their highest values in 14 months and this usually results in a price pullback.

Therefore, investors should be aware of the potential risks of investing in Bitcoin. Despite the warnings, the crypto market continues to be bullish and the surge in Bitcoin’s price has attracted many new investors to the space. Whether or not the market will experience a price pullback in the coming days remains to be seen.