Bitcoin has been a key price to monitor over the last week. jumping by nearly 10% It will be less than seven working days. The latest data on the chain suggests that the bears may be in store for a longer ride, as the funding rate has fallen to critical low levels.
BTC Bears At Risk Of A Short Squeeze
Gaah has published a Quicktake article on the CryptoQuant Platform. revealed Bitcoin’s funding rates are in steep decline, and the price has built the foundation for an extended recovery. This indicator is called the Funding rates metric. It tracks the fee that traders exchange on a daily basis in the derivatives markets for BTC.
In the derivatives markets, a positive funding rate usually means that long traders (investors who have buy positions) pay a fee for short traders. If the funding is negative as it is in this scenario, the period fee will be paid by the investors with sell positions to the traders who hold buy positions.
CryptoQuant data shows that the Bitcoin Funding Rates metrics fell to a level of -0.011 – its lowest since February when BTC prices plunged to the $60,000. “The market is very ‘easy’ and obvious to trade on [the] sell side,”Gaah wrote about this in the Quicktake article.
On the chain perspective, there are two aspects to consider. negative funding rate signals that the majority of the market — are bears — betting against the price of Bitcoin. However, historically extremely negative rates of funding have proven to be an obstacle. “contrarian signal,”The price of an asset tends to go in the opposite directions as the majority (the bears in this example).
As prices begin to rise unexpectedly, several traders may be forced to close their overleveraged short positions, causing a further boost in the asset’s value in a phenomenon known as the “short squeeze.”Crypto analyst Gaah noted in their Quicktake article that the likelihood of a squeeze is increasing every day.
“Caution is needed when establishing positions in [the] current range, since it represents an area of buying demand,”The pundit on the stock market concluded.
Bitcoin Price Analysis
After a fairly positive performance over the past week, the price action of Bitcoin has somewhat slowed down this weekend — as has been mostly seen on most weekends over the past year. The premier cryptocurrency, as of the time this article is written, has a value of $73,425. This reflects no movement over the last 24 hours.
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Source: www.newsbtc.com
