Bitcoin Hovers Above $104K—Analyst Reveals What’s Next Based on Funding Rates
Bitcoin appears to be taking a breather after reaching an all-time high (ATH) above $109,000 earlier this week. So far, the asset’s upward momentum has waned slightly, with the price just hovering above $104,000.
However, despite the slowdown in gains, Bitcoin’s recent performance has sparked renewed interest in the market. CryptoQuant analyst Burak Kesmeci recently shared opinion Get an in-depth look at Bitcoin’s price action and key market indicators to reveal potential future moves.
In a recent article published by the CryptoQuant QuickTake platform, Kesmeci’s analysis focused on the Binance Bitcoin funding rate, a metric that provides significant clues about: Market sentiment and dynamics.
By reviewing historical data from previous bull market cycles, he identified three distinct phases that can serve as a framework for interpreting the current market environment.
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Based on funding rates, what’s next for Bitcoin?
According to Kesmeci, during the 2020-2021 bull run, Binance Bitcoin funding rates went through three distinct phases:
Phase 1 (July 2020): Funding rates held steady at 0.01 in the weeks leading up to the surge in demand. This phase was like the “calm before the storm,” with Bitcoin rising from $9,000 to $12,000 as funding rates rose to 0.10.
Phase 2 (November 2020): After the initial rally, Bitcoin experienced a correction. Funding rates briefly turned negative and then turned positive, supporting Bitcoin’s climb From $12,000 to $19,000.
Phase 3 (December 2020): As Bitcoin breaks through previous highs and breaks the $60,000 mark, funding rates rise sharply, reflecting strong market support.
Currently, Kesmeci noted that the Binance Bitcoin funding rate is at a baseline level of 0.01, consistent with the early stages of a bull cycle. The analyst wrote:
Analyzing recent data, I believe we have completed the first two phases of this bull cycle. For the third phase, I will be watching closely to see if the Binance Bitcoin financing rate exceeds 0.01.
The analyst mentioned that a sustained rise above the 0.01 level would indicate increased activity in the futures market and could lead to another round of gains. significant upward movement.
However, Kesmeci also warned that increases in financing rates are often unsustainable and that markets tend to restore balance through “long squeeze” events.
Key Indicators and Differences in the Market
In a separate analysis, another CryptoQuant analyst TraderOasis explored Several key indicators, including the Coinbase Premium Index, open interest, and funding rates. These indicators paint a picture of the health and potential direction of the Bitcoin market.
TraderOasis highlights the differences between the Coinbase Premium Index and Bitcoin price action. While the asset reached new highs above $109,000, the Coinbase Premium Index formed lower highs. This inconsistency raises concerns about the sustainability of current price trends.
Additionally, the divergence between open interest and price also suggests that the market may lack the solid foundation needed for continued growth. upward motivation. According to TraderOasis, a healthy uptrend requires these indicators to align more closely, which would indicate strong investor confidence and stable market structure.
Looking at funding rates, TraderOasis has observed a recent bearish sentiment among traders. However, he noted that this often happens before prices fluctuate wildly.
Analysis suggests that an initial rise may shed bearish positions, followed by a pullback. This pattern, if realized, could set the stage for a more sustainable long-term upward trend.
Featured image created using DALL-E, chart from TradingView
