Cross-chain data shows that Bitcoin’s funding rate remains at a relatively high positive value, which indicates that the cryptocurrency may see a further decline in the near term.
Bitcoin funding rate has been at a positive value for the past few days
As pointed out by an analyst at CryptoQuant Mailthe current funding rate indicates that the price is at a new low now.
The “Funding rate“It is an index that measures the periodic fees that traders in the Bitcoin futures market have to pay to each other.
When the value of this metric is above zero, this means that long traders are currently paying a premium to short traders to maintain their positions. These values indicate that the uptrend is the most dominant in the market at the moment.
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On the other hand, the negative values of the indicator indicate that the majority sentiment is bearish at the moment as short positions are driving long positions at the moment.
Now, here is a graph showing the trend in Bitcoin funding rates over the past six months:
The value of the metric seems to have been positive in the past week | Source: CryptoQuant
As you can see in the chart above, whenever the Bitcoin funding rate has reached a relatively high positive value over the past few months, the cryptocurrency has generally noticed a drop after not too long. Similarly, negative rises in the value of BTC have resulted in some upside.
Here’s what’s going on: High positive values mean long positions are accumulating in the market. Therefore, a big sudden drop can liquidate a lot of this stuff, which could eventually drive the price further lower, thus liquidating more long positions. This event in which the filters creep together is called “squeezing(or in this case a long squeeze).
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A few days ago, when the price of the cryptocurrency was above $23,000, the funding rate again hit a positive peak and the price subsequently fell. However, the current value of the indicator is still very positive, which may mean that the decline is still continuing.
At the time of writing this report, Bitcoin price It is floating around $22.7K, up 6% in the past seven days. Over the past month, the value of the cryptocurrency has gained 8%.
The chart below shows the currency price trend over the past five days.
Looks like the value of the crypto has been sliding down over the last few days | Source: BTCUSD on TradingView
Featured image from Brent Jones on Unsplash.com, charts from TradingView.com, CryptoQuant.com