Bitcoin Funding Rates Surge to Multi-Month Highs, Signaling Bullish SentimentAn analyst says the weighted perpetual futures funding rate for Bitcoin open interest (OI) has reached its highest level in months, suggesting potential bullish sentiment for the short-to-medium term. The current weighted funding rate for OI is at 0
Bitcoin Funding Rates Surge to Multi-Month Highs, Signaling Bullish Sentiment
An analyst says the weighted perpetual futures funding rate for Bitcoin open interest (OI) has reached its highest level in months, suggesting potential bullish sentiment for the short-to-medium term. The current weighted funding rate for OI is at 0.012%, a level not seen since Bitcoins brief surge to $68,000 on July 27.
Ruslan Lienkha, Head of Markets at YouHodler, explains that while positive funding rates generally signal bullish market conditions, they should be interpreted with caution. Local spikes in positive funding rates can indicate a bullish trend in the short-to-medium term, but they shouldnt be used for long-term predictions due to cryptos volatility, Lienkha told TheBlock.
Lienkha says funding rates in traditional markets, such as commodities, tend to reflect long-term trends because they are tightly coupled with the real economy, which moves at a slower pace. However, the YouHodler analyst points out that the crypto market behaves differently. Crypto lacks direct connection to real economic processes, leading to faster shifts in market sentiment, he said. As a result, funding rates in the cryptocurrency markets are prone to greater volatility, making them less reliable as long-term indicators compared to other asset classes, he added.
Increased Liquidations Drive Funding Rate Rise
The rise in funding rates comes amid heightened market volatility, leading to substantial liquidations. According to Coinglass, over $93 million worth of Bitcoin positions were liquidated over the past 24 hours, with $83 million being short positions. This indicates a surge in bullish bets as traders holding short positions were forced to liquidate their positions during Bitcoins price climb.
Across the broader cryptocurrency market, liquidations exceeded $240 million over the same period, with the second-largest cryptocurrency, Ethereum, seeing $50 million in liquidations, with $43 million being short positions.
Following a weekend consolidation, Bitcoin broke above the $65,000 mark, rallying over 6% in the past few hours and surpassing the 200-day moving average. Traders are watching this breakout closely, according to Bitget Chief Analyst Ryan Lee, especially after several recent attempts to break this key level failed. The focus now shifts to whether Bitcoin can sustain this upward momentum or face another pullback.
Lee further elaborates on factors encouraging optimism about Bitcoins near-term price movement. The breakout of Bitcoin BTC+2.22% above $65,000 is significant, especially given recent token accumulation and positive sentiment around the US presidential elections, he told TheBlock.
Positive Inflation Data Boosts Market Sentiments
The cryptocurrency markets ascent also coincides with positive inflation data from the US Producer Price Index (PPI). The PPI came in at 0% on Fridaylower than the forecast of 0.1%indicating easing inflation pressures. The Core CPI (excluding volatile items like food and energy) also came in lower than expected at 0.1%, compared to forecasts of 0.2%. The PPIs year-on-year increase clocked in at 1.8%, boosting investor confidence in riskier assets like crypto.
Lee highlights that the positive inflation data could act as a catalyst for Bitcoins further gains. The PPI report eased concerns about inflation, which were exacerbated by the previously released CPI report. This helps to support the current Bitcoin rally and could pave the way for a year-end surge, Lee said.
Looking Ahead
Looking ahead, Lee expects Bitcoin to trade between $50,000 and $80,000 by year-end, potentially seeing greater volatility in the first quarter of 2025. If key economic indicators remain positive and Bitcoin breaks through current resistance levels, we could see further upside acceleration, especially as various market catalysts come into play, he said.
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