Another week, another all-time high for Bitcoin. And as usual, shortly after pulling an astounding rally a new water higher mark of $58,000, the world’s largest crypto-asset retraced its steps back and was currently trading at $54,879.
With this Bitcoin’s YTD gains now stood at around 86%. Despite this, the blockchain intelligence platform, Glassnode, noted that there has not been any significant increase in funding rates yet. The average funding rate for perpetual swaps across major exchanges was found to be around 0.05%.
So what does this mean for Bitcoin?
Firstly, the reason for a lack of increase in the funding rates could indicate that the market participants are more keen in buying Bitcoin in the spot markets rather than using leverage.
The investors doing BTC perpetual swaps are not yet ready to enter short positions as the market kept soaring. In short, these participants do not view a potential damaging plunge in the near-term. This was evidenced by the average funding rate which remained a little over zero.
Hence, it can be drawn that investors and traders expect the market to move higher.
Soaring Trade Volume
Moreover, Bitcoin’s trading volume on spot exchanges has climbed significantly after surging above $50K. As the figures for trade volume on spot exchanges continue to rise even at the current price level, it is likely that the said region may become crucial support for Bitcoin in the near-term.
Reversal would be damaging
It was a watershed moment for Bitcoin when it climbed a $1 trillion market cap due to increased institutional inflow. And here’s why the fear of a damaging reversal lingers.
Going by the derivatives chart, it can be noted that open interest [OI], as well as a trading volume, continue to cut through new levels for BTC futures across exchanges, hence there is a probability that if the price were to correct below $50000, it may trigger a slew of liquidations and have a long-term negative impact on the price.