The Bitcoin price surpassed a full-time high over Christmas, reaching $ 24,681 at Binance. After a strong rally in BTC, traders and analysts are looking at bear incidents and gatherings in the short term.

Market sentiment for Bitcoin is still very positive, but analysts have expressed some concerns in the foreseeable future, and as a result, the next step is not clear.

Bitcoin Futures Funding Rate
Bitcoin (BTC) raised over $ 24,600 in relatively short press. Only short contracts of $ 95 million have been settled in the last four hours, indicating that this rally was not caused by a short pressure. A short squeeze occurs when several short contracts or sales orders are settled in the futures market. This happens when sales orders have excessive influence, which means that traders aggressively sell delivered bitcoins.

Since the rally was not driven by short-term pressure, the futures market was dominated by long-term buyers and holders. This trend has led to the funding ratio of the largest bitcoin futures exchanges being 0.1%. Funding Ratio is a mechanism used by futures exchanges to stimulate holders of long or short contracts based on market sentiment. If there are longer contracts, the financing rate will be positive, which means that buyers need to motivate sellers.

The average financing rate for bitcoin futures on most exchanges is 0.01%. When the financing rate is 0.01%, the trader must pay 0.01% of his position as an incentive for card sellers who are in the minority in the market. However, when the financing rate increases and traders who buy Bitcoin have to pay a large financing fee, this becomes less relevant for a long Bitcoin.

At present, as of December 25, Bitcoin futures’ financing rate is around 0.1%. Thus, traders and strategists say that Bitcoin is in danger of a decline as it has become less demanding on long BTC, at least in the short term. Mohit Saruut, co-founder of Bitazu Capital, pointed to the extremely high level of Bitcoin financing, indicating the possibility of a decline: “I would be completely surprised if $ BTC continued to rise from now on.”

Edward Moura, a cryptocurrency derivatives trader, thanked this view. He added that many futures market traders began searching for or buying bitcoins after hitting around $ 24,400. After the cut, the financing rate is expected to change after a local correction. Mora tweeted: “Derivatives traders did not buy the downside, but instead Omega went bullish again at the top, which has become a classic. It will now get rid of positional clutter, bring premiums and funding back to baseline, and continue with a local correction. ”

However, some traders disagree that futures financing is of the utmost importance during a strong bullish wave. Salsa Tequila, a Bitcoin trader under a pseudonym, pointed out that the BTC financing rate in the beef market in 2017 reached 0.375%. Given that the rate is much higher, but perhaps at an early growth stage, the trader said that the actual financing rate may not have been as expected. Beak:

“Short selling ATH during the bullish open is only dependent on financing, while I hope for a Wyckoff peak, sounds very stupid to me. The financing was 0.375 (maximum) for several weeks during the growth period in 2017. ”
Given Bitcoin’s previous historical price cycle, traders are more cautious about predicting a peak in the short term. This leads to a bullish state for BTC in the foreseeable future, which is based on the theory that historical trends cannot be repeated during a bull market.

Bitcoin bull case in the near future
Bitcoin’s short-term case is based on two main factors: institutional accumulation and the Bitcoin-altcoin profit cycle. Both trends continue, with the influx of shades of gray continuing to grow while altcoins lag behind BTC.

Ki Yong Joo, CEO of CryptoQuant, said he expects a bitcoin correction as institutional purchases decline. But until that happens, seen through grayscale valuation under management and CME futures data, Joe said he will remain bullish: “When institutional buying stops, the price is likely to fall sharply. The new ATH will be decided by institutional investors when they stop buying BTC dollars. Until then, I will remain bullish. ”

Source: CoinTelegraph