On-chain information reveals the Bitcoin funding charge continues to be at a comparatively excessive optimistic worth, suggesting that the crypto may see extra decline within the close to time period.
Bitcoin Funding Rate Has Been At A Positive Value During The Last Few Days
As identified by an analyst in a CryptoQuant post, the present funding charge means that the value is in a brand new decline proper now.
The “funding rate” is an indicator that measures the periodic price that merchants within the Bitcoin futures market need to pay one another.
When the worth of this metric is above zero, it means lengthy merchants are at the moment paying a premium to the quick merchants to maintain their positions. Such values point out {that a} bullish sentiment is extra dominant available in the market for the time being.
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On the opposite hand, unfavourable values of the indicator indicate the bulk sentiment is bearish proper now as shorts are paying longs at the moment.
Now, here’s a chart that reveals the pattern within the Bitcoin funding charges during the last six months:
The worth of the metric appears to have been optimistic previously week | Source: CryptoQuant
As you may see within the above graph, each time the Bitcoin funding charge has reached a comparatively excessive optimistic worth throughout the previous few months, the value of the crypto has usually noticed a decline not too lengthy after. Similarly, unfavourable spikes have resulted within the worth of BTC seeing some uptrend.
Here’s what’s happening right here: excessive optimistic values imply longs are piling up available in the market. So, a big sufficient sudden decline can liquidate a whole lot of these, which may find yourself driving the value additional down, and thus liquidating much more lengthy positions. Such an occasion the place liquidations cascade collectively known as a “squeeze” (or on this case, an extended squeeze).
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A number of days again, when the value of the crypto was above $23k, the funding charge once more made a optimistic peak and the value subsequently went down. However, the present worth of the indicator nonetheless appears to be fairly optimistic, which can imply the decline continues to be ongoing.
BTC Price
At the time of writing, Bitcoin’s price floats round $22.7k, up 6% within the final seven days. Over the previous month, the crypto has gained 8% in worth.
The beneath chart reveals the pattern within the value of the coin during the last 5 days.
Looks like the worth of the crypto has been sliding down over the previous few days | Source: BTCUSD on TradingView
Featured picture from Brent Jones on Unsplash.com, charts from TradingView.com, CryptoQuant.com
