Indicator Overview

The indicator is the Funding Velocity Index (FVI). It measures the Rate of Change (RoC) of the Bitcoin perpetual futures Funding Rate. The Funding Rate itself reflects the difference in price between the perpetual futures contract and the spot price, indicating market sentiment (positive rate means longs pay shorts; negative rate means shorts pay longs).

The FVI focuses on the velocity of this sentiment change: how quickly the Funding Rate is accelerating or decelerating.

How To Use

The FVI is used to identify rapid shifts in futures market sentiment that often precede sharp price moves or indicate market extremes (overbought/oversold conditions).

High Positive FVI Readings indicate that the Funding Rate is accelerating rapidly to the upside, meaning traders are quickly paying higher fees to maintain long positions. This suggests extreme market greed, over-leveraging of longs, and FOMO. This can signal a short-term local top or a sharp correction (long-squeeze) is imminent due to excessive leverage.

Low Negative FVI Readings indicate that the Funding Rate is accelerating rapidly to the downside, meaning traders are quickly paying higher fees to maintain short positions. This suggests extreme market fear, over-leveraging of shorts, and capitulation. This can signal a short-term local bottom or a sharp rebound (short-squeeze) is imminent due to excessive bearish leverage.