The cost, known as funding rates, that crypto derivatives platforms charge for maintaining equilibrium between current market price and future contracts in Bitcoin (BTC), is decreasing. This could potentially worry those who are optimistic about Bitcoin’s price increase, according to the author of CryptoQuant.
Bitcoin funding rates declined significantly: What does this mean?
When Bitcoin (BTC), the leading cryptocurrency, failed to break through $100,000, indicators in its derivatives market began suggesting a depleted demand. The funding rates for BTCUSDT contracts on exchanges have noticeably decreased, as pointed out by CryptoQuant’s community analyst @ShayanBTC in his recent QuickTake post.
Bitcoin Funding Rates Indicate Subdued Interest in Derivatives as Market Sentiment Remains Cautious, with Hesitation Observed Following the Rejection at $108K. – By @ShayanBTC7
— CryptoQuant.com (@cryptoquant_com) January 8, 2025
Earlier, a rejection of around $108,000 was particularly tough on this specific indicator, as observed by the analyst. Consequently, major cryptocurrency exchanges have decreased their funding rates because there are fewer traders opting to open Bitcoin (BTC) trading positions.
The current trend suggests that traders are less dedicated to the derivatives market, causing a lack of backing necessary to sustain the upward trend, according to the analyst’s assessment.
For Bitcoin users (BTC), there could be further price drops to expect if Bitcoin fails to maintain its position above $90,000. In such a case, it’s possible that Bitcoin will retest lower Fibonacci support levels during potential future market declines.
Previously reported by U.Today, Bitcoin (BTC) fell from $102,000 to $95,200 today. On a larger scale, the entire cryptocurrency market experienced a 8.3% decrease in value, with meme coins taking the hardest hit.
Bitcoin RSI already targets oversold zones
The fees that exchanges collect from derivative traders are known as funding rates. Typically linked to perpetual contracts, these fees decrease when there is less demand for a particular asset.
On the other hand, the Bitcoin (BTC) Relative Strength Indicator indicates a significantly more positive trading sentiment. Lately, it has fallen from around the mid-70s down to nearly 35, which is close to the boundary of the “overbought” region.
At a point when Bitcoin (BTC) surpassed $100,000, a significant technical analysis indicator suggested that the Bitcoin was undeniably overextended or overvalued in the market.
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2025-01-08 19:49