Bitcoin, Ethereum Trading Secrets Revealed; going short can be…
The crypto market’s notorious fluctuating volatility continues to see different fortunes on a monthly basis. From traders selling their tokens at a loss to betting against the market (hoping for a rally) – the market has seen it all. But what happens this time?
Hold fast
Bitcoin has been falling since reaching a record high price of $69,000 in November 2021. Altcoins also witnessed the wrath of the general market decline.
In fact, Ethereum fell by 11.45%, while Bitcoin fell by 9.29%. Likewise, crypto liquidation reached 673 million just two days ago. But here’s something to look forward to according to Santiment, the analytics platform.
After market recovery, cryptocurrency exchange saw high levels of card trades coming in as people fear a fall to June levels again.
Traders have bet against the market as the price showed some important signs of life. The reading of the average funding rate supported this narrative.
The negative financing rate indicated that perpetual prices went below the marked price.
Source: Sentiment
This rapid change in funding rates indicated a reversal of sentiment from greed to fear. Thus signaling a potential sign of a bottom.
Ergo, by leveraging this “bearish” mindset, betting against the market flow made sense for traders. Sentiment on added, “as long as they are betting against markets, there is a greater chance of an increase.”
Not a bad sign though
Ki-Young Ju, CEO of on-chain analysis resource CryptoQuant, also showed how historically a low funding rate “can be a buy signal.” Consider his tweet from last year – which recounts the same result.
In this spot-driven and only up market, a low funding rate can be a buy signal.
It doesn’t seem like a good idea to wait for a correction when institutions are buying $BTC.
Diagram 👉 pic.twitter.com/IwolH6kz0c
— Ki Young Ju (@ki_young_ju) 3 January 2021
Needless to say, going against the crowd in a bullish setting can help one buy crypto at a discounted price.
Furthermore, the indicator for net unrealized profit and loss (NUPL) rose and became positive.
Overall, with reference to the weighted average funding rate, one could argue that short-term owners had overloaded the network, and a recovery could be in play.
In fact, at press time, both BTC and ETH were showing a slight increase on CoinMarketCap, but the rally was not significant enough to help the cryptocurrencies surpass their resistance level(s) in the near term.
