On-chain data shows the Bitcoin funding rate is still at a relatively high positive value, suggesting that the crypto might see more decline in the near term.<\/p>\n
Bitcoin Funding Rate Has Been At A Positive Value During The Last Few Days<\/p>\n
As pointed out by an analyst in a CryptoQuant post<\/a>, the current funding rate suggests that the price is in a new decline right now.<\/p>\n The \u201cfunding rate<\/a>\u201d is an indicator that measures the periodic fee that traders in the Bitcoin futures market have to pay each other.<\/p>\n When the value of this metric is above zero, it means long traders are currently paying a premium to the short traders to keep their positions. Such values indicate that a bullish sentiment is more dominant in the market at the moment.<\/p>\n Related Reading |\u00a0On-Chain Data: Bitcoin Whales With 10k+ BTC Have Been Growing<\/a><\/p>\n On the other hand, negative values of the indicator imply the majority sentiment is bearish right now as shorts are paying longs currently.<\/p>\n Now, here is a chart that shows the trend in the Bitcoin funding rates over the last six months:<\/p>\n\n The value of the metric seems to have been positive in the past week | Source: CryptoQuant<\/a><\/p>\n As you can see in the above graph, whenever the Bitcoin funding rate has reached a relatively high positive value during the last few months, the price of the crypto has generally observed a decline not too long after. Similarly, negative spikes have resulted in the value of BTC seeing some uptrend.<\/p>\n Here\u2019s what\u2019s going on here: high positive values mean longs are piling up in the market. So, a significant enough sudden decline can liquidate a lot of these, which can end up driving the price further down, and thus liquidating even more long positions. Such an event where liquidations cascade together is called a \u201csqueeze<\/a>\u201d (or in this case, a long squeeze).<\/p>\n Related Reading |\u00a0Bitcoin NUPL Shows Average Holder Back In Profit, But For How Long?<\/a><\/p>\n A few days back, when the price of the crypto was above $23k, the funding rate again made a positive peak and the price subsequently went down. However, the current value of the indicator still looks to be quite positive, which may mean the decline is still ongoing.<\/p>\n BTC Price<\/p>\n At the time of writing, Bitcoin\u2019s price<\/a> floats around $22.7k, up 6% in the last seven days. Over the past month, the crypto has gained 8% in value.<\/p>\n The below chart shows the trend in the price of the coin over the last five days.<\/p>\n\n Looks like the value of the crypto has been sliding down over the last few days | Source: BTCUSD on TradingView<\/a> <\/p>\n On-chain data shows the Bitcoin funding rate is still at a relatively high positive value, suggesting that the crypto might see more decline in the near term.<\/p>\n Bitcoin Funding Rate Has Been At A Positive Value During The Last Few Days<\/p>\n As pointed out by an analyst in a CryptoQuant post<\/a>, the current funding rate suggests that the price is in a new decline right now.<\/p>\n The \u201cfunding rate<\/a>\u201d is an indicator that measures the periodic fee that traders in the Bitcoin futures market have to pay each other.<\/p>\n When the value of this metric is above zero, it means long traders are currently paying a premium to the short traders to keep their positions. Such values indicate that a bullish sentiment is more dominant in the market at the moment.<\/p>\n Related Reading |\u00a0On-Chain Data: Bitcoin Whales With 10k+ BTC Have Been Growing<\/a><\/p>\n On the other hand, negative values of the indicator imply the majority sentiment is bearish right now as shorts are paying longs currently.<\/p>\n Now, here is a chart that shows the trend in the Bitcoin funding rates over the last six months:<\/p>\n The value of the metric seems to have been positive in the past week | Source: CryptoQuant<\/a><\/p>\n As you can see in the above graph, whenever the Bitcoin funding rate has reached a relatively high positive value during the last few months, the price of the crypto has generally observed a decline not too long after. Similarly, negative spikes have resulted in the value of BTC seeing some uptrend.<\/p>\n Here\u2019s what\u2019s going on here: high positive values mean longs are piling up in the market. So, a significant enough sudden decline can liquidate a lot of these, which can end up driving the price further down, and thus liquidating even more long positions. Such an event where liquidations cascade together is called a \u201csqueeze<\/a>\u201d (or in this case, a long squeeze).<\/p>\n Related Reading |\u00a0Bitcoin NUPL Shows Average Holder Back In Profit, But For How Long?<\/a><\/p>\n A few days back, when the price of the crypto was above $23k, the funding rate again made a positive peak and the price subsequently went down. However, the current value of the indicator still looks to be quite positive, which may mean the decline is still ongoing.<\/p>\n BTC Price<\/p>\n
\nFeatured image from Brent Jones on Unsplash.com, charts from TradingView.com, CryptoQuant.com<\/p>","protected":false},"excerpt":{"rendered":"