Bitcoin prices have been fairly quiet for the last few days, despite the positive CLARITY Act developments. The leading cryptocurrency had experienced a significant rise in value after the CLARITY Act was passed. dancing around $82,000The price of is just barely above $78,000. A cryptocurrency trader from the social networking platform X believes that Bitcoin’s recent price decline might be a false alarm.
The divergence between BTC price and open interest suggests an imminent reversal
CrypticTrades, a pseudonymous cryptocurrency pundit took the X Platform to discuss crypto. share A unique perspective on Bitcoin’s recent decline in price. According to the market analyst, a series of on-chain indicators point towards the creation of a “trap” for BTC short position traders.
Cryptic Trades emphasized a divergence of Bitcoin’s Price and the Open Interest Metric, which measures all outstanding derivative contracts. BTC has fallen towards $78,000 while the Open Interest indicator is rising.
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When Open Interest and Price move in the opposite direction, it usually means that there is a chance of a trend reverse (in this case, a return of bullish movement).
A trader noted also that Funding Rates were negative. This correlates to the divergence in Bitcoin’s Price and Open Interest. The Funding rates, which are a measure of the fees paid from short to long trader or vice-versa, tend to be negative when the bears have control over the market.
The Cryptic Trading Company noted the negative funding rates that suggest bears. “doubling down” On their position and continually betting against the flagship crypto. “It also shows that even though the market structure remains intact, bears are shorting as if a breakdown already happened,” The crypto trader is explained.
Cryptic Trades claims that bear traps can be made by combining these signals. current situation for Bitcoin. A bear trap, also known as a false price pattern, is one that involves an asset dropping in value below the support levels. This deceptive pricing pattern tricks participants on the market into thinking a new downward trend has started.
The fact that funding rates are often extremely negative has led to a phenomena known as A “short squeeze,” In which the price of an asset is forced higher due to the closure of all short positions. Investors should be careful when they enter any new positions.
Bitcoin Price at a Glance
BTC currently trades at around $78,130. That’s a drop of more than 1% over the past 24 hour.
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Chart by TradingView. Image from Shutterstock.
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Source: www.newsbtc.com
