Traders are generally skeptical about Bitcoin (BTC) getting close to major rivals, and there was no exception as the price added 7.7% to attack the $ 11K level.
Not every rally leads to a shift in technical indicators towards overbought levels, but there is usually an increase in volume and futures contracts can go from neutral to bullish. Derivative markets are particularly sensitive to trend changes due to leverage.
With Bitcoin closing at $ 11,000 yesterday, Cointelegraph warned that the move should not be very promising, as failure at this level could lead to serious setbacks.
Let’s analyze the recent price action that ended at yesterday’s close of $ 10,960.
Note that there hasn’t been much resistance in the past three days during the 8% rally. The $ 11K appears to be more of a psychological barrier than resistance, but there are currently no signs that traders are safe from the recent price rally.
Given the price spikes over the past 3 days, the derivative indices and the net buy / sell ratio of the main trader should change accordingly. Thus, the best place to start is to examine Bitcoin’s futures activity.
Bitcoin financing rate is still somewhat lower
Any optimism on the part of buyers should be reflected in the futures financing rate. These permanent futures contracts, also known as reverse swaps, have a built-in margin commission.
On most exchanges, funding rates usually change every 8 hours. If the buyers use more leveraged money than the sellers, the financing rate will be positive; Hence, the buyers are the ones who pay. The opposite happens when the sellers of futures contracts (short positions) demand higher margins.
Not every upward growth will result in a positive funding ratio. However, it is very rare for positive transitions to occur during periods of passive financing.
While no additional centers are created while the beef is operating, canceling card sellers will increase the funding rate. This is due to reduced demand for short leverage trades, but usually accompanied by buyers opening long positions.
The data above shows a brief moment of optimism when the funding ratio turned positive on September 2 before dipping below $ 11,000. Since then, the index has turned negative and there are no signs of an upward direction.
Charging fluctuations from -0.05% to + 0.05% in 8 hours are completely normal and hence neutral. This equates to -1% to + 1% weekly, so if it’s not stored for a long time, it won’t trigger any events.
Lack of weight on trading mood
Volume is the only determining indicator, whether you are doing technical or fundamental analysis. Any significant move that is not supported by a large business raises suspicion among traders and analysts.
Total average bitcoin volume over 7 days. Source: Messari
Messari data shows total adjusted Bitcoin supply of $ 2.15 billion for September 15-16. While this is 13% higher than the 7-day average, it is still well below the $ 3 billion in the past two months.
This is another compelling indication that the bitcoin rally that started a week ago appears to be fading instead of gaining momentum to continue to $ 12,000.
Binance provides long and short long position data for the major traders. It is a great indicator for determining whether professional traders are leaning in an upward or downward direction.
OKEx has a slightly different indicator that measures the mood of the top traders. Due to the difference in methodology, changes should be monitored for each indicator, not the absolute numbers.
Major Binance futures traders are holding a net buy position, even though the current ratio of 1.12 is the lowest since July 25 (8 weeks ago). A similar trend can be seen in the OKEx maximum trading sentiment calculation, which fell to 0.80 from the 1.18 high on September 3.
These indicators support the previously discussed volume and funding level analysis and show a lack of strength behind Bitcoin’s recent recovery below the $ 10,000 level.
It is also worth noting that there are no bearish signals whatsoever from any of these indicators. Instead, the market shows that traders either do not believe or are simply not interested in learning.