The BTC funding rate declined just before its recent bullish rally began. Bitcoin derivatives market indicators were bullish, as were other on-chain metrics.
Bitcoin [BTC] surprised investors with price gains, which were hit hard before. The episode SEC vs. Binance caused problems in the crypto space, so almost the entire market witnessed a slight price correction.
To set the record straight, the SEC recently charged Binance and its founder, Changpeng Zhao, with operating a network of deceptions. Because of this, the government watchdog accused Binance of 13 crimes.
A Look at the Stage
Although BTC’s weekly price action was marginally red, its value has risen more than 4% in the last 24 hours. According to CoinMarketCapital BTC was trading at $26,856.52 with a market capitalization of over $520 billion.
Recent CryptoQuant analysis pointed to an interesting development that was occurring at the time when the BTC price was preparing for the latest pump. Eralp Buyukaslan, author and analyst at CryptoQuant, revealed in his latest analysis that this could have played a role in the bullish rally.
Retail investors’ short positions have been rising sharply for hours. While the price of BTC fell, its funding rate turned negative. Historically, BTC’s price has moved at the opposite rate of its funding rate.
The Derivatives Market Gave Many Clues
A look at data from Coinglass revealed that BTC open interest was on a downtrend. A nosedive in the metric usually means that the market will witness a trend reversal, and that is what happened this time when the price of Bitcoin rose.
On top of that, the BTC long/short ratio also recorded a rally. A high long-short ratio indicates positive investor expectations, giving hope for a continued uptrend in the coming days. BTC’s taker buy/sell ratio was also green, suggesting that buying sentiment was dominant in the derivatives market.
Bitcoin Investors Are Now Confident
Thanks to the rally, market sentiment around BTC turned positive. This was evident by the increase in sentiment weighted for BTC. However, it was interesting to see its popularity waning, as its social dominance waned over the past week.
What Does On-Chain Data Have to Say?
A look at CryptoQuant data revealed that Bitcoin was not under selling pressure. The currency reserve was declining, which is a typical bullish sign.
Furthermore, the supply of BTC on exchanges decreased while its off-exchange supply increased. The BTC binary CDD noted that long-term holder movements over the past seven days were lower than average. This reflected their willingness to keep their assets.
Going Beyond: BTC Technical Indicators
BTC needs to move through the $26,637 pivot to target the first major resistance level (R1) at $27,116, and Wednesday’s high of $27,393. A return to $27,000 would indicate a prolonged bullish session. Crypto news leads and economic indicators need to be crypto-friendly to support a prolonged rally.
A move through the 50-day EMA ($26,773) would support a break of the 100-day EMA ($26,943) and R1 ($27,116) to give the bulls a run to the 200-day EMA ($27,204). and R2 ($27,873). However, a failure to move through the 50-day EMA ($26,773) would leave S1 ($25,880) in the offing. A move through the 50 day EMA would send a bullish signal.
By Audy Castaneda