Bitcoin Long Squeeze Incoming? Funding Rates Surge Up
05 Mayo 2022 - 02:00PM
NEWSBTC
On-chain data shows the Bitcoin funding rates have observed a rise
again, suggesting that another long squeeze may be in store for the
crypto. Bitcoin Funding Rates Show Relatively High Positive Value
As explained by an analyst in a CryptoQaunt post, the current
positive funding rates may mean the price could observe a decline
soon. The “funding rate” is an indicator that measures the periodic
fee that Bitcoin futures traders are paying each other. When the
value of this metric is greater than zero, it means long traders
are paying a premium to short investors to hold on to their
positions right now. This trend therefore suggests that the
majority sentiment is bullish at the moment. On the other hand,
negative values of the indicator imply that a bearish sentiment is
more dominant as shorts are paying longs currently. Now, here is a
chart that shows the trend in the Bitcoin funding rates (72-hour
MA) in the year 2022 so far: Looks like the value of the metric has
surged up recently | Source: CryptoQuant As you can see in the
above graph, the quant has marked the points where the Bitcoin
funding rates reached a peak during the last few months. It seems
like shortly after relatively high positive funding rates occurred,
the price of the crypto observed a steep decline. Related Reading
| Five Months Of Fear: When Will The Bitcoin Carnage End? A
long squeeze is a mass leverage flush event where long liquidations
cascade together. Such a squeeze can sharply drive the price down
and the above instances seem to have been marked by this squeeze. A
short squeeze, on the contrary, can rather uplift the price. The
analyst therefore argues that the Bitcoin market will require
negative funding rates if the price has to observe any real
improvements. However, as longs are currently dominating the
futures market, a long squeeze will need to happen to take the
funding rate down and pile up shorts. Related Reading
| Bitcoin Institutional Outflows Near One-Year Highs, More
Downside Coming? But with that, the price of the crypto may also
suffer another plunge down just like the instances earlier in the
year. BTC Price At the time of writing, Bitcoin’s price floats
around $39.5k, down 1% in the last seven days. Over the past month,
the crypto has lost 15% in value. The below chart shows the trend
in the price of the coin over the last five days. The price of BTC
seems to have observed a sharp rise in the past twenty-four hours |
Source: BTCUSD on TradngView Bitcoin has been struggling for many
months now and the price has recently shown no signs of any real
recovery as it remains stuck below the $40k level. Featured image
from Unsplash.com, charts from TradingView.com, CryptoQuant.com
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