Bitcoin Looks Bullish As Funding Rates Turn Positive

Keshav Verma

1 year ago

3 mins read

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Data shows funding rates for Bitcoin have turned positive, a signal that might indicate market sentiment is bullish among traders.

Bitcoin Funding Rates Turn Positive, While Derivative And Spot Reserves Move Down

As pointed out by a CryptoQuant post, the funding rates seem to be slightly positive for the BTC market right now.

The Bitcoin funding rates are the payment that traders need to pay so that they can keep an open position. This additional, periodic fee is based on the difference between the perpetual contract market and the spot price.

These funding rates are used for perpetual futures contracts by all cryptocurrency derivatives exchanges. When the value is positive, longs have to pay a fee to the shorts. While when it’s negative, the opposite stands true.

Because of this, a positive funding rate implies many traders are bullish as they have to pay a premium to keep their positions. In contrast to this, the market sentiment is bearish when the funding rate is negative.

Now, here is a chart that shows the trend in the funding rates for Bitcoin:

The various indicators seem to be bullish | Source: CryptoQuant

As the above graph shows, the funding rates seem to be slightly positive at the moment. This could indicate there is bullish sentiment among traders right now.

Another thing to notice in the chart is that the funding rates remained green in May when BTC was making new all-time-highs (ATHs), but a negative spike occurred when the price went downhill.

Besides the funding rates, the chart also has two other indicators: the derivatives exchange reserve and the spot exchanges reserve.

Both these values also seem to be heading downwards. This could be another bullish sign as it may mean investors want to hodl right now rather than sell.

BTC Price

At the time of writing, Bitcoin’s price is around $46.5k, up almost 18% in the last 7 days. Monthly gains for the cryptocurrency stand at 40%.

The below chart showcases the trends in the price of BTC over the span of the last three months:

BTC's price continues on the overall upwards trend | Source: BTCUSD on TradingView.com

Bitcoin sets eye on $47k as the coin continues to enjoy a sharp uptrend over the past week. It’s unclear at the moment how long the crypto can keep this trend up. It’s possible BTC could soon start moving down, however, if the funding rates are anything to go by, the sentiment among many traders seems to be bullish at the moment.

Featured image from Unsplash.com, charts from CryptoQuant.com, TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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