Bitcoin Trading Indicators Point Towards Potential Price Surge, Despite Bearish Predictions
Summary:
Key Bitcoin (BTC) trading indicators, the funding rate and 3-month annualized basis rate, have pointed towards a potential rise in the cryptocurrency's price, according to Reflexivity Research's co-founder, Will Clemente. Despite a brief negative dip, these rates appear to be consolidating. Notwithstanding contrary predictions from futures traders, some crypto commentators and traders maintain a bullish outlook, in part due to Bitcoin's resilience enduring low funding rates. Meanwhile, Bitcoin's annualized basis rate has gravitated towards the higher end of the neutral range on major exchanges.
Two prominent Bitcoin (BTC) trading indicators — the funding rate and 3-month annualized basis rate — are pointing towards a potential upward trend in the cryptocurrency's price, states a crypto analyst. In a May 7 post on X, Reflexivity Research co-founder Will Clemente noted that Bitcoin's funding rate and Basis rate appear to be following a consolidation phase after briefly dipping into negative figures.
The funding rate of Bitcoin, which is used as a means to gauge overall sentiment within the cryptomarket, is utilised by exchanges to strike a balance between traders going long and those opting for shorts, in order to prevent overexposure. Whenever the balance tips in favour of long-position traders, the funding rate enters the positive zone, signalling their belief in the value of Bitcoin appreciating.
Presently, the OI-weighted funding rate stands at 0.0091%, having bounced back from -0.0050% on May 4, according to the data provided by CoinGlass. Crypto Empire, a pseudonymous crypto commentator, observed this seems like the "calm before the storm."
Mister Crypto, a pseudonymous crypto trader, reflecting on the continued low Bitcoin funding rates juxtaposed with Bitcoin's resilience declared themselves "extremely bullish" to their 98,000 followers on X.
Over the span of four days, this shift in the funding rate coincided with a slight rise of 1.11% in Bitcoin's price, taking it to $62,361, as per CoinMarketCap.
However, liquidation data tells another tale, implying that futures traders still lean towards the bear and foresee a near-term decrease in price. A price surge of 3.5% to the significant $65,000 mark could result in the liquidation of $1.36 billion worth of short positions. Conversely, a 3.5% fall to $60,500 would yield only $650 million liquidated in long positions.
Simultaneously, some traders have observed that Bitcoin's annualized basis rate has tipped towards the higher scale of the 5-10% neutral band on leading exchanges such as Binance, OKX, and Deribit.
The annualized basis rate represents the difference in cost between a Bitcoin futures contract and the actual price of Bitcoin. Often, rates surpassing 10% are viewed as a neutral-to-bullish signal by traders.
Despite this, readers are advised to conduct thorough research before making any investment or trading decisions, as they come with inherent risk. This article does not proffer investment advice or recommendations.
Published At
5/8/2024 6:13:31 AM
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