Bitcoin for the first time in its history rose above the $100K mark on January 6 and spiked to $102,760 before the market downturn dragged it back below $100K. Currently, Bitcoin is ranging between $96,000 and $102,000 and it daily trading volume is $6.58 billion.
However, even with the bullish trends seen in the last week, the overall market seem to need an antidote. The Bitcoin funding rate according to Glassnode has been reduced to 0.009% which is now below the funding neutrality point of 0.01%.
This decline signified a level of prudence from traders especially from the trader’s long term trading point of view. Funding rates, used for determining market sentiment are set by the exchanges for perpetual futures products. An optimistic rate accrues to the advantage of longs while a bearish rate supports the shorts.
Bitcoin Trading Volume Surges
The weekly moving average of the funding rate also came down to 0.009% from the 0.026% seen in mid-December. According to Coinglass, the Bitcoin Open Interest-Weighted Funding Rate increased to 0.0058% percent but is still below the January 5 high of 0.0113%.
CoinShares also noted an increase in Volume-Weighted Funding Rate to 0.0051%, although this is nowhere near that 0.0111% that was experienced earlier on. The funding rate data supports the interpretation that traders were careful and skeptical about bitcoin’s, potential to keep trending north.
Over-leveraging has not been observed to be high and this is an indication that markets are skeptical and bearish for a discernible market upturn. Nevertheless, there is some encouraging data in the derivatives market.
This was established based on the fact that the daily trading volume for BTC increased from 52 percent to $85 billion while the open interest increased by only 2 percent. Long/Short ratio is 1.0243 suggesting that investors are neutral. Also, the Chande Momentum Index (CMI) was 58.71 on the Bitcoin price trend before stalling as its price went below $100K amidst corrections.
Such price movements have been volatile for BTC and the fluctuation in these sentiments further depicts that there is increasing optimism as well as skepticism prevailing in the market especially waiting for right signal to follow.
