Leverage In Derivates Market Dipped Bitcoin Price

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This week has seen some bearish price action for bitcoin, and what’s the cause? One of the main catalysts is the leverage in the derivatives market.

When looking at the perpetual futures funding rate, we can see downturns in bitcoin price coupled with a reduction in funding rate from the highs. What this is showing is that the derivatives market bulls got ahead of the spot bitcoin market, and were speculating with leverage on a rise in price. If/when this rise in price does not come, these traders are caught offsides, and a leverage unwind occurs.