Bitcoin price action may be overheated, the aggregated open interest and CVD of BTC futures markets are meeting notable resistances
Bitcoin price experienced a strong rally higher over the past week, reaching a high of 13,250. At press time, BTC is trading around $ 13,296, up nearly 3% over the past 24 hours. Looking at the derivative trends, it can be seen that Bitcoin price is likely to continue the breakout. Furthermore, the open interest rates and the composite CVD of Bitcoin futures markets face notable resistance levels.
BTC/USD 4-hour chart | Souce: TradingView
What effect does a higher increase in the funding rate have on Bitcoin price?
Bitcoin price has experienced a strong rebound higher in the past week. BTC has risen from $ 11,200 – last week’s low to $ 13,296 at press time. That’s a 17.5 percent increase in ten days. Many people note that this move is predicted based on spot market volume on exchanges like Coinbase. Many see leading rallies as bullish because it shows the emergence of institutional money or large amounts of retail capital, or even a combination of the two.
But as the rally descended in the $ 12,800 – $ 13,200 range, a derivative influence began to appear. Derivative-led rallies are often seen as less sustainable rallies as traders will eventually need to close their long positions, leading to selling pressure.
Looking at derivative trends, analyst Byzantine General has acknowledged that Bitcoin price can be overheated:
“Further confirmation that derivatives are overheated.”
It shows that the aggregated funding rate of leading Bitcoin futures markets is currently inching well into the positive. The funding rate is the fee that long positions pay short positions to keep the future price near the price of the spot market. High funding rates often suggest that derivatives markets are driving the market higher and may need to correct. The chart also shows that the aggregated open interest and CVD of futures markets are meeting notable resistances.
However, most are confident that Bitcoin is scalable in the direction of growth.
According to Nautilus Research, the macro BTC chart looks similar to how it did before the time-exponential rally:
“Bitcoin echoes of patterns ahead of previous major breakouts.”
Bitcoin holds above $ 13,000 by the end of the day and over the weekend on Sunday, which is also a positive sign for this market to move higher. BTC has not held over $ 13,000 weekly since the start of 2018.
You can see the Bitcoin price here.