On-chain knowledge reveals the Bitcoin funding fee remains to be at a comparatively excessive constructive worth, suggesting that the crypto would possibly see extra decline within the close to time period.
Bitcoin Funding Rate Has Been At A Positive Value During The Last Few Days
As identified by an analyst in a CryptoQuant submit, the present funding fee means that the value is in a brand new decline proper now.
The “funding fee” is an indicator that measures the periodic charge that merchants within the Bitcoin futures market need to pay one another.
When the worth of this metric is above zero, it means lengthy merchants are at the moment paying a premium to the brief merchants to maintain their positions. Such values point out {that a} bullish sentiment is extra dominant available in the market in the intervening time.
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On the opposite hand, damaging values of the indicator suggest the bulk sentiment is bearish proper now as shorts are paying longs at the moment.
Now, here’s a chart that reveals the development within the Bitcoin funding charges over the past six months:
The worth of the metric appears to have been constructive prior to now week | Source: CryptoQuant
As you possibly can see within the above graph, every time the Bitcoin funding fee has reached a comparatively excessive constructive worth throughout the previous couple of months, the value of the crypto has typically noticed a decline not too lengthy after. Similarly, damaging spikes have resulted within the worth of BTC seeing some uptrend.
Here’s what’s occurring right here: excessive constructive values imply longs are piling up available in the market. So, a major sufficient sudden decline can liquidate quite a lot of these, which may find yourself driving the value additional down, and thus liquidating much more lengthy positions. Such an occasion the place liquidations cascade collectively is known as a “squeeze” (or on this case, a protracted squeeze).
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A number of days again, when the value of the crypto was above $23k, the funding fee once more made a constructive peak and the value subsequently went down. However, the present worth of the indicator nonetheless appears to be like to be fairly constructive, which can imply the decline remains to be ongoing.
BTC Price
At the time of writing, Bitcoin’s value floats round $22.7k, up 6% within the final seven days. Over the previous month, the crypto has gained 8% in worth.
The under chart reveals the development within the value of the coin over the past 5 days.
Looks like the worth of the crypto has been sliding down over the previous couple of days | Source: BTCUSD on TradingView
Featured picture from Brent Jones on Unsplash.com, charts from TradingView.com, CryptoQuant.com
