Bitcoin Funding Rate Falls To Critical Level — | Crypto News
After a dour efficiency throughout the week, the price of Bitcoin skilled a truthful quantity of bullish impetus on Friday, February thirteenth. Going into the weekend, the premier cryptocurrency appeared on its approach to reclaim the psychologically related $70,000 degree. Interestingly, latest on-chain data reveals that this latest bullish spurt is perhaps the start of, at least, a short-term rally for the Bitcoin price.
Is Bitcoin On The Verge Of A Short Squeeze?
In a Quicktake post on the CryptoQuant platform, market analyst CryptoOnchain revealed that the Bitcoin Funding Rate on Binance, the world’s largest cryptocurrency exchange by trading quantity, has dropped to a critically low degree — one not seen in over a yr. The related indicator right here is the 14-day Simple Moving Average (SMA-14) of BTC Funding Rate.
Typically, the Funding Rate metric estimates the periodic price paid by merchants in a derivatives market for a explicit cryptocurrency (Bitcoin, in this case). When the funding charge is in the constructive territory, it normally implies that the long merchants (buyers with buy positions) are paying a price to short merchants (buyers with promote positions) in the derivatives market.
On the flip facet, a damaging funding charge metric, as is the case presently, suggests that the cost goes from the short merchants to the long merchants. Data from CryptoQuant reveals that the 14-day SMA of the Bitcoin Funding Rate on Binance has fallen to -0.002, its lowest degree since September 2024.
As CryptoOnchain rightly famous, a deeply damaging funding charge, particularly one that lasts over a 14-day average, signifies that bears (short merchants) are more and more betting against the premier cryptocurrency. The market analyst famous that these extraordinarily damaging values often correlate with the underside of extreme downward trends.
CryptoOnchain wrote in the post:
From an on-chain and market psychology perspective, deeply damaging funding charges often serve as a strong Contrarian Signal. The market presently seems to be closely “overcrowded” on the short facet.
From a historic perspective, this on-chain development has often set the stage for a potent short squeeze, where a minor price rebound may set off a cascade of liquidations of the mounting short positions. This cascade of short liquidations often serves as jet fuel, additional propelling the Bitcoin price to the upside.
Bitcoin Price At A Glance
As of this writing, the price of Bitcoin stands at around $69,000, reflecting an over 5% bounce in the past 24 hours.
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