Fun

Is Bitcoin’s negative futures funding rate a sign of an upcoming BTC price crash?

News Feed - 2024-04-19 07:04:00

Marcel Pechman1 hour agoIs Bitcoin’s negative futures funding rate a sign of an upcoming BTC price crash?Bitcoin bears celebrate as demand for leveraged long positions hits a six-month low, but crypto traders on X think it"s time to go long.1336 Total views9 Total sharesListen to article 0:00Market AnalysisOwn this piece of crypto historyCollect this article as NFTJoin us on social networksOn April 18, Bitcoin (BTC) futures contracts exhibited significant demand for short (sell) positions, sparking speculations of further bearish momentum. This trend was influenced by the lack of inflows into spot Bitcoin exchange-traded funds (ETFs) and the expectations of rising interest rates in the U.S., all contributing to a negative market sentiment.Bitcoin funding rate flips bearish after 6 months


Retail traders often favor perpetual futures, a type of derivative that closely mirrors the price movements of regular spot markets. To maintain balanced risk exposure, exchanges implement a fee every eight hours, known as the funding rate.


This rate turns positive when buyers (longs) demand more leverage, and negative when sellers (shorts) seek additional leverage. Typically, a neutral funding rate is around 0.025 per 8-hour period or 0.5% weekly. Conversely, negative funding rates, though infrequent, are seen as highly bearish indicators.Bitcoin perpetual futures 8-hour funding rate. Source: Laevitas.ch


The BTC funding rate notably flipped negative on April 15 and again on April 18, marking the lowest levels in over six months, which indicates a reduced appetite for long positions. This shift in market sentiment typically becomes evident after significant price movements, as seen with the 13.5% decrease in Bitcoin’s price between April 12 and April 18.


Market dynamics often show that the strongest impacts occur when confidence among bears intensifies. For example, some analysts interpret the $72,000 double-top formation as a sign that the downtrend could persist until June.Source:CyclesFan


From a broader economic perspective, recent U.S. data showing stronger-than-expected inflation and robust retail sales have reduced investors" aversion to risk. The Consumer Price Index rose 3.8% annually in March, well above the Fed’s 2% target, with retail sales also up by 0.7% year-over-year.


A thriving economy lessens the likelihood of the Federal Reserve reducing interest rates, which tends to favor fixed-income investments. As Reuters points out, a strong labor market has supported consumer spending despite concerns over financial strains among lower-income households.Bitcoin spot ETFs flows dictate the market sentiment


Farside Investors reports that there was a $165 million net outflow from spot Bitcoin ETFs on April 17, marking the fourth consecutive day of withdrawals. This marks a stark contrast to early April when these ETFs attracted $484 million despite ongoing outflows from the Grayscale GBTC fund.


Data suggests that Bitcoin bulls might have retreated from leveraging after a period of heightened optimism. In March 2024, there were seven instances where the funding rate exceeded 1.2% per week. This led to days of extreme volatility, resulting in significant 48-hour liquidations: $300 million on March 5, $261 million on March 16, and $225 million on March 19.


This volatility has evidently taken a toll on the morale of the bulls, particularly since Bitcoin’s price rose by 12.3% during March. Despite accurately predicting the price movement, the sharp price fluctuations depleted their margin deposits and triggered forced liquidations.


Related: BlackRock ETF close to overtaking Grayscale, despite second-lowest daily inflows


For a deeper understanding of market sentiment, traders are advised to also observe the Bitcoin options markets, where a growing demand for put (sell) options typically signals a focus on neutral-to-bearish price strategies.Bitcoin options put-to-call volume ratio at Deribit. Source: Laevitas.ch


Recent data indicate that the demand for call (buy) options has exceeded that for put (sell) options by 35% over the past week. In essence, there is currently no evidence in the Bitcoin futures and options markets to suggest an imminent price correction or deteriorating conditions. If anything, the data confirms that the brief dip below $60,000 on April 17 was insufficient to foster a long-term bearish sentiment.


This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.# Bitcoin# Cryptocurrencies# Funding# Bitcoin Price# ETF# Markets# GBTC# Bitcoin Halving# Leverage# Futures# Market Analysis# Bitcoin OptionsAdd reaction

News Feed

Ezra Reguerra10 hours agoLiquid staking claims top spot in DeFi: Binance reportA Binance spokesperson highlighted that there are things to be wary of when liquid staking, including smart contract vulnerabilities, slashin
Turner Wright7 hours agoSignal hints at leaving UK market following passage of online safety billCritics of the U.K. Online Safety Bill had pushed for amendments prior to passage, claiming the legislation could allow aut
The End of the Blockchain Scalability Problem? ILCoin Achieves 33,000+ Tx/s With 1.5 GB Blocks
TwitterFacebookLinkedInReddit Blockchain technology has the potential to change the world and disrupt numerous indu
Mark Cuban’s Bitcoin Plan: Run for President if BTC Hits $1 Million, Free Satoshis for Every Citizen
Mark Cuban"s Bitcoin Plan: Run for President if BTC Hits $1 Million, Free Satoshis for Every Citizen Billionaire Shark Tank investor Mark Cuban has shared his id
Zhiyuan Sun5 hours agoHong Kong Stock Exchange launches settlement platform powered by smart contractsDubbed “Synapse,” the platform will accelerate trades placed by international investors for Mainland Chinese stock
French President Emmanuel Macron on Taiwan: ‘Being an Ally Does Not Mean Being a Vassal’
French President Emmanuel Macron on Taiwan: "Being an Ally Does Not Mean Being a Vassal" French president Emmanuel Macron has decided to double down on his strategic autonomy polic
Gareth Jenkinson9 hours agoSatoshi-era Bitcoin awakens: 1,005 BTC mined in 2010 on the move1,005 BTC, valued at $29 million, has been moved from an old Bitcoin wallet after 13 years, drawing parallels to recent dormant B
Record Breaking Unmoved Bitcoin Data Sparks Expectation of Imminent Bull Run
Record Breaking Unmoved Bitcoin Data Sparks Expectation of Imminent Bull RunThe amount of bitcoin that has not moved in over a year is at an all-time high. The last peak was in 2016
Crypto Experts Give Their Top Predictions for 2020
Crypto Experts Give Their Top Predictions for 2020 In an industry built around digital scarcity, opinions are in plentiful supply. Everyone’s got one, and they’d love
German gov’t $354M BTC sell-off: Yet more volatility incoming?
Josh O"Sullivan13 hours agoGerman gov’t $354M BTC sell-off: Yet more volatility incoming?The German government is ramping up its Bitcoin sell-off, preparing to offload an additional $342 million worth of BTC.6302 Total
Data Shows 78% of the Circulating Bitcoin Supply Is Illiquid, Only 4.2M BTC in Constant Circulation
Data Shows 78% of the Circulating Bitcoin Supply Is Illiquid, Only 4.2M BTC in Constant Circulation Onchain statistics show 78% of the circulating bitcoin supply
Bitcoin Mayer Multiple hits lows that last accompanied $30K BTC price
William Suberg1 hour agoBitcoin Mayer Multiple hits lows that last accompanied $30K BTC priceThe Bitcoin price is increasingly low compared to its 200-day moving average — a key “buy the dip” signal, per the classi