Bitcoin funding rates turn positive, why the rally may not be over
Bitcoin funding rates had fallen below neutral two weeks ago after finally recovering from a month-long downtrend. This had triggered fears of another bearish trend starting in the market. However, this has quickly changed as the figures for last week have come in. This time around, bitcoin funding rates paint a better picture for the digital asset.
Financing rates return to neutral
Bitcoin funding rates for the past week have been more bullish compared to previous weeks. This is because it had continued to maintain its positive at neutral for a full seven days; there was not a single point in the week that funding rates had actually fallen below neutral. This is the first time since March that borrowing rates have consistently remained above the negative level for a few weeks.
A rise in funding rates is always a welcome change for the market, which is why last week’s day is still important. With a market like this, where bitcoin continues to struggle to get comfortably above $23,000, there needs to be a significant change in not only sentiment, but also in the amount of money being injected into the space.
BTC funding rates return to neutral | Source: Arcane Research
With funding rates returning to neutral, that puts it once again on the path to neutral, something that has eluded bitcoin for most of the year so far. The trend, which started in June, has now reached an acceptable point, but the end game remains to find rates that will turn positive if bitcoin is to continue on a bull rally.
BTC trading below $23,000 | Source: BTCUSD on TradingView.com
Will Bitcoin Recover?
Bitcoin is still trending towards $22,800, which surprisingly has become a support level for the digital asset. This level continues to hold tentatively but needs a big push to break out of this level. As funding rates recover, perp traders can likely provide the necessary push.
Related Reading: Why Bitcoin Investors Should Pay Attention to the Macro Environment
As for the influence in the bitcoin market, it remains high. This means that more traders open positions in the digital asset. But it also puts them in a precarious position in a situation where liquidations can pile up quickly, especially with a move below $22,000.
Nevertheless, the bull indicators remain strong, albeit slightly weaker compared to last week. The $23,000 resistance is not as strong as bears would like, which puts the next major resistance well above $23,500. If bitcoin can break the 50-day moving average once more, it is likely to rise above $24,000 again.
Featured image from The Economic Times, charts from Arcane Reseach and TradingView.com
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