Potential Rebound on Bitcoin’s Funding Rate Amid Market Downturn
The recent decline of Bitcoin below the $60,000 threshold has initiated a significant downturn across the cryptocurrency market. However, emerging indicators in Bitcoin’s funding rate suggest the possibility of an impending price rebound. Currently, Bitcoin (BTC) has experienced a 6% drop in value over the past 24 hours, trading at approximately $59,200. Furthermore, the daily trading volume has surged by 46%, reaching $41 billion, with the price hitting a local low of $58,100—a reflection of the prevailing market anxiety.
According to insights shared by CryptoQuant analyst Julio Moreno on the social media platform X, significant exchange inflows were observed on August 27 prior to the recent selloff. Moreover, it has been noted that substantial holders of Bitcoin participated in these inflows, highlighting that both the cryptocurrency market and Bitcoin itself exhibited signs of being overbought.
Data obtained from crypto.news indicate that the Bitcoin Relative Strength Index (RSI) peaked at 75 on August 24 but has since consistently declined, currently resting at 25. This decline illustrates that Bitcoin is presently in an oversold condition at this price point. Moreover, as reported by Coinglass, Bitcoin’s funding rate has decreased to negative 0.004% following the extensive selloff. This abrupt change in the funding rate signifies an increase in the volume of trades speculating on a continued decline in Bitcoin’s price, particularly after witnessing $96.5 million in liquidations over the last 24 hours.
Historically, a swift alteration in an asset’s funding rate typically results in price movements in the opposite direction, suggesting a potential short-term rebound for Bitcoin. Overall, the broader cryptocurrency market has experienced over $320 million in liquidations in the past day, encompassing $285 million in long positions and $35 million in short positions.
Furthermore, as reported by CoinGecko, the total market capitalization of cryptocurrencies has diminished by 7%, currently standing at $2.17 trillion, accompanied by a 24-hour trading volume of $108 billion. It is prudent to remain vigilant regarding any significant macroeconomic developments and political movements that could potentially sway the financial landscape.
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