Bitcoin trader under the pseudonym (BTC) shed light on 23 major technical and fundamental factors that could support a bullish BTC position in the medium term.
The data points that the seller shares and known as the “Byzantine General” fit into four main themes. It is a less overheated market, which neutralizes the futures market, less leveraged traders, and strength fundamentals.
Bitcoin futures market has been neutralized
Since Bitcoin’s redemption of $ 10,300, the ongoing story surrounding the most important cryptocurrency has been its negative funding rate.
Bitcoin in the futures market implements a mechanism called “financing” to prevent the market from swinging in the dominant direction. Thus, when the market is significantly bullish, investors who invest in BTC growth offset the card sales, and vice versa.
Over the past week, the level of Bitcoin financing has remained either negative or neutral despite the price drop. This means that sellers in short positions continued to bet Bitcoin, but there were no contracts long enough to pay.
The lower probability of prolonged pressure ultimately led to a change in market sentiment. Bitcoin short selling quickly became a crowded business and caused little squeeze.
The trader confirmed that a negative or primary funding rate is a positive factor for Bitcoin. It is to explain:
“Firstly, this is financing. One of the best indicators for determining market sentiment. After falling from 12k, it has been consistently negative, or at best a rule. Second, we have a contango index. This shows the difference between the SPOT price and the derivative exchange rate. When SPOT rates go up, The index is dropping into the green. Continued flagging of the spot exchanges is optimistic. ”
For swing traders like Byzantine General, who focus on long-term trades rather than short-term trades, it is important to change market sentiment.
The cryptocurrency market is less used
Initially, the Bitcoin resistance range fell from $ 12,000 to $ 12,500 on August 17 and then again on September 2.
Two back-to-back rejections of Bitcoin in a critical resistance area were brutal for futures traders. Over the next two weeks, open interest in the futures exchanges declined rapidly.
The term “open interest rate” refers to the total amount of long and short contracts active in the futures market. In short, it shows the dollar amount in the BTC price movement.
The sharp decline in open interest in futures contracts has reduced the number of people trading Bitcoin with additional leverage. Large futures exchanges in the cryptocurrency market provide support up to 125 times. Generally speaking, higher financial leverage opens the possibility of sharp price fluctuations.
The trader explained that lower open interest rates mean there are fewer loan positions in the market now. In his opinion, the trend of Bitcoin is optimistic in the medium term. He said:
“Is the market excessive? The 12k chain was so brutal. We had several days of settlement at over half a billion. About a billion OIs have been destroyed since the peak in the 12k range.”
Important network indicators show that the market is no longer overheating
Chain indicators can be useful to gauge sentiment in the Bitcoin market by analyzing headline activity and profits.
According to the MPL Pure Trader Index, the Bitcoin market is less hot than it used to be. As with previous bullish cycles, the trader said it started in the cryptocurrency market. He don:
“MPL net. This indicates that the market is no longer overheating. We have recently reset. Red areas are good shopping areas. When we look at the previous uptrend in 2017, we see that these small reboots are turning points as it regains momentum again. ”
Cryptocurrency Fear and Greed also shows that market sentiment has turned neutral after the recent rebound in BTC (higher values indicate a warming of the market).
Institutions are getting stronger
Bitcoin is, at its core, a decentralized blockchain network powered by the computing power of miners. As such, hash frequency is often an important calculation to measure the fundamental strength of the blockchain.
The tick indicator shows when miners go through the surrender phase when they sell a large amount of bitcoins.