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3 On-chain Metrics to Monitor Futures Market
1- Funding Rates
Funding rates refer to the periodic fees paid by long or short-position holders to each other in the futures market.
How to use it:
Investors can compare current funding rates with historical levels.
If the current funding rate is significantly above or below the average, it may indicate an overbought or oversold expectation. This observation can encourage traders to reassess their positions and adjust their strategies accordingly.
For example, if the funding rate has reached unusually high levels, it may indicate overcrowded long positions and potentially lead to a price correction. Understanding this situation, traders can choose to realize their profits as a precaution or consider opening short positions.
2- Open Interest
Open positions represent the total number of futures contracts opened by market participants.
To utilize this data, traders can monitor changes in open positions alongside price…
