The data shows that the Bitcoin funding rate has risen to a relatively high positive value recently, something that could lead to prolonged pressure in the market.
Bitcoin funding rate turns positive as open interest rises
As pointed out by an analyst at CryptoQuant MailThe BTC funding rate has a positive value at the moment.
The “frank interest“It is an indicator that measures the total amount of currently open positions in the Bitcoin futures market.
When the value of this metric is high, it means that there is a significant amount of leverage involved in the market at the moment. Excess leverage usually causes the price of the cryptocurrency to become more volatile.
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On the other hand, lower values of open interest can lead to less volatility in the BTC market as there is not much leverage in the futures market.
Now, here is a graph showing the trend in open interest over the past week:
Looks like the metric's value has increased recently | Source: CryptoQuant
As you can see in the chart above, open interest on Bitcoin has been on the rise in recent days. This could mean that the cryptocurrency could experience higher volatility in the coming days.
Another indicator,financing rate,” It measures the periodic fees that traders on derivative exchanges pay each other to hold their positions. This metric tells us how open interest is divided between long-term and short-term traders at the moment.
The chart below shows how the value of this indicator has changed over the past seven days.
The value of the indicator seems to have been green recently | Source: CryptoQuant
From the graph, it is clear that the Bitcoin funding rate currently has a relatively high positive value. This means that there are more long positions in the market at the moment.
As long-term traders pay a premium to maintain their positions (which is why the price is positive), overall market sentiment is tilting to the upside.
However, as open interest values rise, any large swing in the price can cause a so-called “long press“It is an event in which mass liquidations of long positions clump together and push the price further lower.
At the time of writing, Bitcoin price is hovering around $20.9K, down 2% in the past week. Over the past month, the cryptocurrency has lost 5% of its value.
The price of BTC has climbed up over the past couple of days | Source: BTCUSD on TradingView
Featured image from Aleksi Räisä on Unsplash.com, charts from TradingView.com, CryptoQuant.com