Blockchain

The Solana Foundation, a non-profit organization dedicated to decentralization, adoption, and security on the Solana network, has launched token extensions.  

Solana Token Extensions Gains Traction

According to a January 24 announcement, token extensions provide developers, enterprises, financial institutions, and Solana-native development teams with a comprehensive suite of turnkey solutions for advanced token functionality. Anatoly Yakovenko, co-founder of Solana and CEO of Solana Labs, commented on the launch, stating: 

Token extensions build on the characteristics that make Solana the ideal destination for developers. Solana is the first network to offer this level of integrated developer and user experience in a single token program. We’re already seeing the potential to build using token extensions via deployments from some of the most recognizable names in crypto.

Industry giants Paxos and GMO-Z.com Trust Company Inc. (GMO Trust) are leading the way in adopting token extensions. As announced by the Solana Foundation, these companies are “leveraging the benefits” of token extensions to issue stablecoins on the Solana blockchain. 

As previously reported, Paxos, a regulated blockchain and tokenization infrastructure platform, expanded its stablecoin issuance to the network in December. Similarly, GMO Trust announced the launch of the first regulated Japanese yen stablecoin and their own US dollar stablecoin on the Solana network. 

New Standards For Blockchain Compliance? 

Sheraz Shere, Head of Payments at the Solana Foundation, emphasized the appeal of the Solana network for enterprise-grade companies entering the web3 space. Shere stated: 

Companies like Visa, Worldpay, Stripe, Google, and Shopify have already seen the performance advantages inherent to the Solana network and have launched solutions and applications that are only possible on Solana. With token extensions, we are expanding what is possible for enterprise adoption of blockchain by natively enabling features that matter to large regulated enterprises.

Token extensions, designed to cater to builders across diverse industries such as stablecoins, real-world assets (RWA), and payments, offer a range of interesting features:

Transfer Hooks: Enables token issuers to exert control over token interactions, empowering developers to create intricate and flexible token mechanisms.
Transfer Fees: Provides the ability to charge fees for each token transfer, offering sustainable revenue models for different types of tokens built using token extensions.
Confidential Transfers: Utilizes zero-knowledge proofs to encrypt the transfer amount while publicly sharing the source, destination, and token type. This ensures compliance while preserving privacy.
Permanent Delegate Authority: Grants token issuers absolute authority over their tokens, particularly for those requiring revocation ability, such as licenses or credentials.
Non-transferability: Restricts token transfers to the issuer only, making it ideal for unique user identification and credentialing purposes.

Ultimately, with the launch of token extensions, Solana aims to position itself as a force in blockchain development, offering builders the tools to create new applications across various industries. 

The SOL token experienced a sharp drop of over 28% in the past 30 days, leading to a decline to the $79 level. However, the token has recovered in the past 24 hours with a 5% bounce, leading to a current trading price of $87.

Featured image from Shutterstock, chart from TradingView.com 

On January 23, Wallet Connect and other web3 companies informed their users about a phishing scam using official web3 companies’ email addresses to steal funds from thousands of crypto wallets.

A Massive Phishing Campaign

Wallet Connect took X to notify its community about an authorized email sent from a Wallet Connect-linked email address. This email prompted the receivers to open a link to claim an airdrop, however, the link led to a malicious site and, as Wallet Connect confirmed, it was not issued directly by the team or anyone affiliated. Wallet Connect contacted web3 security and privacy firm Blockaid to investigate the phishing scam further.

We’ve detected a sophisticated phishing attack impersonating @WalletConnect via a fake email linking to a malicious dapp.

Blockaid enabled wallets are safe.https://t.co/quz9olGrpZ pic.twitter.com/TYS0BjIk2J

— Blockaid (@blockaid_) January 23, 2024

In the following hours, crypto sleuth posted a community alert to inform unaware users that CoinTelegraph, Token Terminal, and De.Fi team emails were also compromised, signaling that a massive and more sophisticated phishing campaign was happening.  At the time of the post, around $580K had been stolen.

After investigating, Blockaid later revealed that the attacker “was able to leverage a vulnerability in email service provider MailerLite to impersonate web3 companies.”

Email phishing scams are common among cyber scammers, making users wary of most suspicious links or emails. At the same time, companies and entities advise against opening links that do not come from their official channels. In this case, the attacker was able to trick a vast number of users from these companies as the malicious links came from their official email addresses.

The compromise allowed the attacker to send convincing emails with malicious links attached that led to wallet drainer websites. Specifically, the links led to several malicious dApps that utilize the Angel Drainer Group infrastructure.

The attackers, as Bloackaid explained, took advantage of the data previously provided to Mailer Lite, as it had been given access by these companies to send emails on behalf of these sites’ domains before, specifically using pre-existing DNS records, as detailed in the thread:

Specifically, they used “dangling dns” records which were created and associated with Mailer Lite (previously used by these companies). After closing their accounts these DNS records remain active, giving attackers the opportunity to claim and impersonate these accounts. pic.twitter.com/cbTpc5MXu1

— Blockaid (@blockaid_) January 23, 2024

MailerLite Explains Security Breach

The explanation later came Via an email, where MailerLite explained that the investigation showed that a member of their customer support team inadvertently became the initial point of the compromise. As the email explains:

The team member, responding to a customer inquiry via our support portal, clicked on an image that was deceptively linked to a fraudulent Google sign-in page. Mistakenly entering their credentials there, the perpetrator(s) gained access to their account. The intrusion was inadvertently authenticated by the team member through a mobile phone confirmation, believing it to be a legitimate access attempt. This breach enabled the perpetrators) to penetrate our internal admin panel.

MailerLite further adds that the attacker reset the password for a specific user on the admin panel to consolidate the unauthorized control further. This control gave them access to 117 accounts, of which they only focused on cryptocurrency-related accounts for the phishing campaign attack.

An anonymous Reddit user posted an analysis of the situation and gave a closer look at the attacker’s transactions. The user revealed:

One victim wallet appears to have lost 2.64M worth of XB Tokens. I’m showing about 2.7M sitting in the phishing wallet of 0xe7D13137923142A0424771E1778865b88752B3c7, while 518.75K went to 0xef3d9A1a4Bf6E042F5aaebe620B5cF327ea05d4D.

The user stated that most stolen funds were in the first phishing address. At the same time, approximately $520,000 worth of ETH were sent to privacy protocol Railgun, and he believes that they will soon be moved through another mixer or exchange.

Amid the current market turmoil, the Bitcoin Fear & Greed Index has continued on a sharp decline. This decline has seen the index fall to its lowest level in over three months as crypto investors become more fearful and hold their investments from the market.

Bitcoin Fear & Greed Index Takes A Nosedive

In the months leading up to the end of the year 2023, the Bitcoin Fear & Greed Index climbed steadily until it reached high greed levels. Now, this index takes a number of factors into consideration to place investor sentiment across a number of categories ranging from Extreme Fear, Fear, Neutral, Greed, and Extreme Greed.

The Fear & Greed Index represents investor sentiment using scores between 1 and 100, with the lower end of the score representing fear levels and the higher ends representing greed. A score between 1 and 25 puts investor sentiment in Extreme Fear, 26-46 is Fear, 47-52 is Neutral, 53-75 is Greed, and 76-100 is Extreme Greed.

In 2023, the score climbed as high as 74 as Bitcoin rallied toward $50,000. However, as the market has retraced, so has investor sentiment, which is currently trending toward fear. At the time of writing, the Bitcoin Fear & Greed Index is showing a score of 58, which puts it in Neutral territory. It is also two scores down from the previous day’s figures of 50 which means that investor sentiment is trending more toward fear than greed.

The current figure is the lowest that the index has been since October 2023. The last time the Bitcoin Fear & Greed Index fell below 48 was on October 17 2023. In cases like these, it shows that investors are less inclined to put money into the market. This causes demand to fall, and as a result, prices of assets across the space suffer for it.

When Will The Bleed Stop?

So far, the decline in the Bitcoin price has been triggered by massive outflows from the Grayscale Bitcoin Trust (GBTC) as investors redeemed their shares. Over $2 billion in BTC has flowed out from the fund, and this has put a lot of selling pressure on the asset.

However, as the week progresses, the outflows are expected to slow down as investors stop selling. In such a case, the demand would be all to catch up with the supply being dumped on the market, thereby giving Bitcoin and other assets a chance to recover.

At the time of writing, the Bitcoin price is still trending around $40,000 after a bounce back from a dip to $38,500. The price is up 2.6% in the last week, according to data from Coinmarketcap.

The ongoing saga of the Mt. Gox exchange casts a shadow over the Bitcoin community, even years after its dramatic collapse. Recent developments have stirred the pot again, with Mt. Gox reaching out to former users to confirm ownership of accounts linked to Bitcoin payments.

This move comes amid ongoing efforts to compensate creditors, primarily in Japanese yen, through their PayPal accounts. With the repayment process expected to continue this year, the crypto community remains on edge regarding the implications of releasing Mt. Gox’s substantial Bitcoin holdings, amounting to 142,000 BTC and 143,000 BCH, in addition to 69 billion yen.

Expert Optimistic Take On Gox Coin Release

Amid the swirling rumors and speculation, renowned Bitcoin advocate and CEO of Jan3, Samson Mow, has stepped forward to offer his perspective, seeking to alleviate concerns regarding the potential market impact of unlocking “Gox coins.”

Mow believes creditors’ long wait has cultivated resilience to prevent a sudden, mass sell-off of these assets. According to Mow, even if some creditors decide to sell, the market is well-equipped to “absorb” the impact without significant disruption.

Gox coins unlocking isn’t really a factor. Creditors having to force HODL for a decade aren’t likely to sell soon. What about buyers of claims? They may have sought fiat gains initially, but had a front row seat to #Bitcoin NgU and should now be thinking “sell for gains in what?”

— Samson Mow (@Excellion) January 24, 2024

This view was echoed in response to a user named Spoonman on X, who suggested that around half of the creditors might be inclined to sell. Mow confidently stated that such selling would not co-occur, reinforcing his belief that the market can handle the situation smoothly.

Even if some sell, they aren’t going to do it all at once. Market can absorb it all easily regardless.

— Samson Mow (@Excellion) January 24, 2024

Bitcoin Unexpected Reversal

Interestingly, the Bitcoin market has recently shown signs of recovery, defying some analysts’ expectations of a continued downturn. At present, Bitcoin is experiencing a 3% increase over the past 24 hours, with its trading price hovering above $40,000

However, it’s important to note that this uptick follows a significant decline, with Bitcoin down by 5.7% over the past week and over 10% in recent weeks.

This modest recovery contradicts the bearish forecast presented by Bitfinex in their latest Alpha Report, which anticipated further market downturns. Bitfinex analysts pointed out the vulnerability of Bitcoin’s price due to the reduced profitability of short-term holders.

According to the analyst, this group of investors’ potential reaction to the market conditions could lead to critical support levels being tested at around “$38,000 and $36,000,” as per the report.

However, contrary to prediction, Bitcoin has surged slightly far away from these highlighted support zones. For context, the asset currently trades for $40,037 at the time of writing.

Featured image from Unsplash, Chart from TradingView

Fred Krueger, an investor and crypto analyst, is predicting a “vicious” Bitcoin (BTC) rally shortly. He cites the recent unprecedented accumulation of the coin by Wall Street heavyweights.

This surge in institutional interest coincides with the recent approval of the first spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC).

Wall Street Ramping Up Bitcoin Purchase

In a post on X, Krueger pointed to the substantial Bitcoin purchases by major financial institutions, including Fidelity Investments, BlackRock, and Ark Invest. To illustrate, the analyst noted that Fidelity was buying approximately 4,000 BTC every day. 

Related Reading: Bitcoin Goes To The Doctor: 5 Key Metrics For BTC In 2024

On the other hand, Ark, Krueger continues, has been gobbling upwards of 1,500 BTC daily. BlackRock, the world’s largest asset manager, has yet to release its Bitcoin holdings. However, based on the pace of Ark Invest and Fidelity Investment’s accumulation rate, BlackRock is likely buying coins at a faster pace. So far, Lookonchain data places BlackRock’s IBIT holdings of BTC at over 44,000.

If anything, the rate at which these Wall Street institutions are doubling down on Bitcoin is a net bullish for price. Notably, BTC demands remain high more than a week after the United States SEC authorized the first spot of Bitcoin ETFs. That they are steadily buying suggests that institutions are bullish about Bitcoin’s potential.

The heightened pace of BTC accumulation is less than three months before the network halves its miner rewards. The Bitcoin halving event in early April will reduce miner rewards from 6.25 BTC to 3.125 BTC. If past price performance guides, the resulting supply shock might trigger another wave of higher highs, even lifting prices above 2021’s peaks of $69,000. 

BTC Falls, FTX Unloads Millions Of GBTC Shares

Even amid the overall optimism, BTC is still struggling. Days after the approval of spot Bitcoin ETFs, BTC has been trending lower, shedding double digits. It even temporarily fell below $40,000 on January 23 before recovering to spot rates.

Analysts pin the sell-off to FTX, the defunct crypto exchange, off-loading an estimated $1 billion of Grayscale Bitcoin Trust (GBTC). With the FTX estate selling their stake in GBTC, prices are expected to stabilize as the unique selling event is alleviated and institutions double down, buying more BTC at spot rates.

Observers also note that GBTC outflows were matched or surpassed by the spike in inflow to other funds, mostly BlackRock’s ETF product. 

Defunct Japanese-based cryptocurrency exchange, Mt. Gox has taken the next steps toward its Bitcoin distribution process to customers who were previously affected by its 2014 hack attack. The crypto exchange has delivered mass emails to account holders as they confirm wallet addresses for individuals eligible for its repayment process. 

Mt. Gox Prepares For Bitcoin Repayments

Recently, Account holders at Mt. Gox reported in a Reddit post that they have been receiving new emails from the crypto exchange regarding an identity verification and confirmation procedure initiated by the exchange. 

Mt. Gox disclosed that it has begun confirming wallet addresses from users who had officially owned accounts at the crypto exchange and had successfully completed their identity verification processes. The crypto exchange also revealed that it would be distributing Bitcoin (BTC) and Bitcoin Cash (BCH) as part of its repayment process to account holders, with the payout ranging from 142,000 BTC to 200,000 BTC. 

Furthermore, Mt. Gox disclosed that the rehabilitation trustee has shared customer details with the custodian to facilitate the account verification process. The crypto exchange warned that customers with disabled or frozen accounts may not be eligible for the fund distribution program. 

In September 2023, Mt. Gox declared an extension of its repayment deadline from October 2023 to October 31, 2024, attributing the decision to the need for further discussions to ensure proper disbursement of funds. During December 2023, the crypto exchange encountered a slight hiccup in its payment distribution process after it announced it had unintentionally issued double payments to specific users. 

Following the error, Mt Gox urgently requested these users to return the excess funds, warning of potential legal consequences and the possibility of being excluded from the reimbursement plan scheduled later this year. 

This year marks nearly a decade since Mt. Gox suffered a hack attack resulting in the loss of a substantial 850,000 Bitcoin. Recent developments in the repayment process bring hope to former customers of the crypto exchange who were adversely affected by the cyber theft. 

BTC Faces $20,000 Crash If Mt. Gox Customers Commence Bitcoin Sell-Off

About 200,000 BTC presently worth over $7.7 billion, is expected to spread through multiple wallet addresses owned by Mt.Gox creditors. This raises concerns about the potential impact this Bitcoin distribution could have on the crypto market. 

Presently, Mt. Gox’s 200,000 BTC repayment amount surpasses the total value of Microstrategy and El Salvador’s Bitcoin holdings, which are among the largest in the world. 

With Bitcoin currently at $39,909, if Mt.Gox account holders receive their reimbursements and attempt a sell-off to take their profits, which have grown by a substantial 99,900%, the price of Bitcoin may dip below $20,000. This would be a monumental crash for the pioneer cryptocurrency, bringing prices back to half of their present market value. 

Shiba Inu marketing lead Lucie has ignited the community’s excitement with a teaser about the project’s future. On X, the platform that has taken the place of Twitter, Lucie dropped a tantalizing hint about what’s to come for the Shiba Inu ecosystem. Her message, shrouded in mystery, suggests a bullish future while details remain undisclosed.

Lucie teased, “I can’t disclose specifics, but if you possess basic blockchain skills and understand the Shibarium process, you can anticipate what’s ahead.” Lucie continued by highlighting the interest from significant investors: “Big investors are now putting their money into the next big thing.” She also shared an intriguing viewpoint on investment, “A fun fact: real art is finding the gem before anyone else.”

She also expressed her confidence in the project’s trajectory, emphasizing the commitment of the team: “I believe in our hard work and persistence; winning is the only option.” She mentioned Shibarium (BONE), LEASH and SHIB in reference to the tokens within the Shiba Inu ecosystem, suggesting that one or more of these tokens will be central to what’s coming next.

In conclusion to her message, Lucie reminded the community of the personal nature of investment goals and the relationship between investment and potential returns: “But remember, each of us has different goals, and how much you invest determines how much profit you collect.”

She encouraged realistic goal setting and wished everyone luck: “Set your bar realistically, and let’s see how it goes. Good luck to everyone on their journey with Shiba Ecosystem or any other project!”

Shiba Inu Price Holds Key Support

Transitioning to the technical analysis of Shiba Inu’s price action, the weekly chart reveals a number of critical insights. The chart below displays the SHIB/USD pair on a weekly timeframe, offering a broad view of market sentiment and price trends.

The price is currently hovering above a crucial support level, as indicated by the recent candles sitting atop the Fibonacci retracement level of 0.236, priced at $0.00000878. This zone is pivotal as it represents a potential reversal area where buyers have previously stepped in.

The descending trend line, drawn from the highs of August 2022, was broken in December 2023, suggesting a shift in the market structure. However, the price has since retested this line, now acting as support.

The EMA (Exponential Moving Average) lines — 20 (red) and 50 (orange) — are of particular interest. Within the last three weeks, SHIB couldn’t close above the EMA50 ($0.00000975) and is currently trading below the EMA50 ($0.00000904). A weekly close above the latter could be a bullish sign.

Notably, the price has been making lower highs, indicative of a downtrend, but the recent support hold above the blue trend line and the 0.236 Fib could be a sign of potential bullish momentum.

The volume profile shows no significant spikes, indicating a lack of strong buying or selling pressure at the current levels. The RSI (Relative Strength Index) sits just above the midline at 54.71, which does not denote an overbought or oversold market, aligning with the consolidation narrative.

Key resistance levels to watch are the Fibonacci levels of 0.382 ($0.00001049) and 0.5 ($0.00001188). A break above these could signal a stronger recovery. Conversely, if the price falls below the current support, the next level to watch would be $0.0000715.

Yesterday, the cryptocurrency market went through a tumultuous ride, witnessing an overall dip of 5%. However, amidst the chaos, one token stood out: OKB, the native token of the OKX exchange. It experienced a dizzying flash crash followed by a remarkable recovery, leaving investors shaken yet surprisingly hopeful.

In a span of 30 minutes, OKB plummeted from $51.99 to a mere $39, causing widespread alarm. The sudden drop triggered a series of liquidations, resulting in a staggering $760 million loss in market value.

OKB Crash: 25% In Value Gone In Minutes

Social media platforms buzzed with panic, confusion, and morbid curiosity as observers watched the token seemingly vanish into thin air.

$OKB, @okx ‘s exchange token, fell by 25% in the past 30 minutes, with no notable outflows from major asset reserves so far.https://t.co/PQ06Wsix82 pic.twitter.com/JsNnvuoDVA

— Ki Young Ju (@ki_young_ju) January 23, 2024

However, OKB staged a comeback that was just as swift as its decline. The token managed to climb back to $47.34, fueled by a surge in trading volume and the OKX exchange’s prompt response.

The exchange swiftly acknowledged the crash and assured users that it would compensate for all liquidation losses. This proactive approach provided a sense of stability amidst the chaotic situation.

（2/2）关于上述问题带来的损失和影响，我们深表歉意并制定如下解决方案：

1/平台将对异常清算给用户带来的额外损失进行全额补偿，包括质押借贷/杠杆交易/跨币种交易，具体赔偿方案将在72小时内公布。
2/我们将进一步优化现货杠杆梯度档位与质押借贷风控规则、清算机制等，避免类似问题再次发生。

— OKX中文 (@okxchinese) January 23, 2024

While the exact cause of the flash crash remains unknown, it highlights the inherent volatility of cryptocurrencies. Thin liquidity, a common challenge in the crypto space, can magnify even minor price fluctuations, making well-established tokens like OKB susceptible to sudden and dramatic drops.

Despite the unsettling nature of this event, some investors find a glimmer of hope in the situation. OKX’s rapid response and commitment to reimbursing its users could help rebuild trust in the exchange and the broader cryptocurrency ecosystem. Furthermore, OKB’s unexpected resilience showcases the potential for rapid rebounds even in the face of extreme turbulence.

Lessons Learned

This volatile episode serves as a stark reminder to investors that the crypto market is a double-edged sword, offering both thrilling highs and gut-wrenching lows. Approaching any digital asset with caution and a comprehensive understanding of the inherent risks involved is crucial.

However, events like this also demonstrate the community’s remarkable ability to adapt and recover. They leave the door open for continued growth and innovation within the ever-evolving world of cryptocurrency.

The flash crash of OKB on the OKX exchange serves as a cautionary tale, emphasizing the importance of risk management and due diligence in the crypto market. Investors must be prepared for sudden and unpredictable price swings, which can result from various factors such as market manipulation, technical glitches, or external news events.

To mitigate the impact of such incidents, exchanges should continually enhance their risk control measures and improve liquidity. OKX’s swift action in acknowledging the crash and offering compensation is commendable and helps restore faith in the platform.

Featured image from Shutterstock

Several analysts have given their opinion on what lies ahead for Solana (SOL). Based on their prediction, the crypto token could experience a further move to the downside as part of a price correction that seems overdue following its parabolic rise back in 2023, when it saw a gain of almost 1,000%. 

SOL Could Drop To As Low As $70

Crypto analyst Bluntz Capital suggested in an X (formerly Twitter) post that Solana could drop to as low as $70. From the chart that he shared, he looked to be analyzing SOL’s price movement using the ABC pattern, with a move to $70 being the C wave. If SOL were to drop to that price level eventually, Bluntz mentioned that he would be “max bidding SOL” as he foresees a further move to the upside once the correction is done. 

Professional Crypto Derivative Exchange Bitunix shared their SOL price analysis in an X post. They highlighted how the crypto token has broken out of its triangle, something which signals more downside ahead. SOL may initially fall to as low as $76 as a result of this. If it fails to hold above the support at that price level, a further decline towards $65 could occur, Bitunix claims. 

Related Reading: Bitcoin Recovery: This Massive $500 Billion Investment Could Send Price Above $50,000

Technical analyst LuxAlgo also hinted at a price decline to $76 based on the chart, which they shared in an X post. They noted that Solana had broken its lows as expected and raised the possibility of a “steeper drop” being imminent. 

Meanwhile, crypto analyst Tryrex Crypto stated that he is betting on a crash back to $71 for SOL. He mentioned how tempting it might be to open a long position right now and expect a bounce on the current support level. However, he seemed skeptical of such a move as he claims that the previous bounce was “too weak to maintain the trend.”

Solana To $150 Once All Is Said And Done

In a more recent X post, Bluntz stated that the SOL ABC pattern is “starting to look done now.” If that is the case, he expects a trend reversal as the next move to the upside should send SOL to above $150. In the meantime, he said that the crypto token is trying to test and reclaim its prior breakdown range. 

Interestingly, crypto analyst Ali Martinez had raised the possibility of Solana rising to $150 in one of his previous price analyses. However, SOL then failed to close above the $106 price level, which Martinez had highlighted as being critical for this price prediction to materialize. Bluntz’s prediction no doubt provides optimism that the $150 price level remains a possibility. 

At the time of writing, SOL is trading at around $86, up over 6% in the last 24 hours, according to data from CoinMarketCap.

An analyst has explained that a futures market signal could be one to wait for before the latest Bitcoin drawdown can finish.

Bitcoin Funding Rates Are Still In The Positive Territory

As pointed out by an analyst in a CryptoQuant Quicktake post, the BTC funding rate has been reducing recently, but it’s still at positive levels. The “funding rate” refers to an indicator that keeps track of the amount of periodic fee that futures contract holders are exchanging between each other currently.

When the value of this metric is positive, it means that the long traders are paying a premium to the short holders right now in order to hold onto their positions. Such a trend suggests that a bullish mentality is dominant in the futures market.

On the other hand, the indicator being negative implies a bearish sentiment may be shared by the majority of the traders as the shorts are outweighing the longs at the moment.

Now, here is a chart that shows the trend in the Bitcoin funding rate over the past year:

As displayed in the above graph, the Bitcoin funding rate has been almost entirely positive since mid-October, suggesting that the longs have been the dominant force in the sector.

Around the start of the year, the metric’s value had hit especially high levels, but after all the volatile price action BTC has seen since then, the indicator has considerably cooled off.

The funding rates have still been at positive levels recently, however, implying that traders haven’t given up on their bullish sentiment just yet. This may not entirely be ideal for the asset to rebound.

According to the quant, for the ongoing Bitcoin downtrend to end, “we need to wait for a capitulation signal from market participants.” In the chart, the analyst has highlighted the last few instances such a capitulation signal appeared for the cryptocurrency.

Such negative spikes for the funding rate imply that the traders have become overly pessimistic about the market. Historically, BTC has tended to move against the expectations of the majority, so it’s not surprising that bottoms have been more likely to form when the traders have been highly bearish about the asset.

Red spikes in the indicator like those shown in the chart may not always perfectly coincide with a low in the price, but they are still nonetheless a sign that tides could change for the coin.

At present, the Bitcoin funding rates are still at positive levels, so some more downtrend may need to occur in the price, before these longs are liquidated and the futures balance shifts towards the other side.

BTC Price

Bitcoin had plunged under the $39,000 mark just yesterday, but the coin appears to have bounced back today as it’s now once again floating above $40,000.