Bitcoin is looking to enter into the $65,000 price terrain again amidst price volatility in the past 24 hours. The latest numbers from two different metrics suggest this could become a reality soon and Bitcoin could be on track to going on a price rally. As noted by a crypto analyst on social media, the Bitcoin funding rate and basis points to a “leg up.”
Bitcoin Is Getting Ready
According to a post on social media by Will Clemente, a popular crypto analyst, both the funding rate and 3-month annualized basis for Bitcoin are starting to cool off after briefly reaching negative readings in the past few weeks. What this means is that long-position trades for the asset are starting to dominate as investors regain confidence in its potential price action in the coming weeks.
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Did a nice look-through of the market for the first time in a week.
Funding rates & Basis have both cooled off after briefly reaching negative readings while stablecoin supplies are rising again. Looks like we’re consolidating before the next leg up. pic.twitter.com/OHLkMrTqUY
— Will (@WClementeIII) May 7, 2024
A detailed look into the chart shared by Clemente shows that the funding rate, in particular, has been ranging in negative readings since the last week of April and reached its lowest on April 22. However, the current price action has pushed the funding rate into positive territory again. The BTC funding rate has rebounded from a negative rate of -0.0050% on May 4 to a current rate of 0.0090%, based on information from Coinglass. Interestingly, this increase in funding rate translated to a concurrent price increase for Bitcoin, with the crypto reaching as high as $64,000 on May 5.
While the funding rate might seem low, it indicates the sentiment from investors is starting to become positive. When the funding rate is positive, traders who have long positions pay a funding fee to traders who have short positions. An increase in this funding rate means more traders are willing to pay more to maintain long positions, which in turn could cause an increase in the crypto’s price.
Source: X
Similarly, Clemente noted in his analysis that the 3-month annualized rate for Bitcoin is now starting to move back up. A consequence of this is that more investors will be willing to buy spot Bitcoin and simultaneously selling a futures contract that expires in three months. Interestingly, this annualized rate is currently ranging around 5% to 10% on Binance and Bybit, which is generally a bullish signal for many investors.
Source: X
The total supply of stablecoins has started rising again, which could signal that investors are getting ready to put money into Bitcoin. According to on-chain data, wallets holding between 100 and 1,000 BTC have upped their buying in the past two months.
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Despite the correction for Bitcoin in April, these addresses continued to acquire more Bitcoins. Analyst Willy Woo noted that an accumulation of this size has never been seen from “high net worth Bitcoin holders” over a 2-month period.
At the time of writing, Bitcoin is trading at $62,350.
BTC price drops to $62,000 | Source: BTCUSD on Tradingview.com
Featured image from MarketWatch, chart from Tradingview.com
