Funding rates indicate further declines as crypto market remains predominantly bearish
In the world of cryptocurrency, traders are constantly monitoring market trends and signals to inform their buying and selling decisions. The latest report by CryptoQuant has revealed some concerning news for those holding Bitcoin, as the market appears to be mostly bearish and betting on further declines.
The report analyzes the funding rate of perpetual futures, which typically indicates the current market bias. When traders build short positions, it suggests a negative outlook on the future price of Bitcoin. The funding rate has recently been showing a strong bearish sentiment, with the last negative hourly value occurring in December 2022 when the price of Bitcoin was around $16,000.
The report also notes that there have been several periods this year where the majority of the market has bet on a fall in Bitcoin’s price, typically during local floors. This is because the market bias is often contrary to traders’ bets, and any significant change in price can result in a squeeze.
However, the report also suggests that this bearish sentiment could lead to a price recovery, driven by cascading shorts liquidations. If more traders build high leverage in the futures market by betting on a directional bias, a strong contrary change in price could result in a significant squeeze that triggers a price recovery.
Overall, this report highlights the current mood in the cryptocurrency market, which is predominantly bearish and anticipating further declines in Bitcoin’s price. However, as with any market, there is always the potential for unexpected shifts and reversals, and traders will be closely monitoring any developments that could signal a change in the market’s direction.
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