Why being trapped in Bitcoin ATH bulls may lead to more downsides

Bitcoin’s record high this month has led to many interesting developments in the crypto space. The success of the first Bitcoin ETF greatly pushed the price of BTC to finally break through the $67,000 price point and caused the market funding rate to soar. ProShares ETF’s trading volume exceeded $1 billion on the first day, indicating an increase in funds flowing into the market.

In October, the soaring of the funding interest rate increased with the price change of BTC. With the trend of BTC, this surge has maintained its momentum. However, as the price of Bitcoin began to show a downward trend, the financing rate has also tended to the level of mid-October.

Peak Bitcoin Open Interest

When the price of digital assets exceeded $67,000, Bitcoin’s open positions soared. Since October when assets reached a record high, the open interest in BTC-denominated perpetual contracts has increased sharply to 15,000. The surge in BTC-led perpetual contracts has exceeded the all-time high set in April.

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The increase in interest on large sums of money is attributable to the surge in financing interest rates recorded last week. More specifically, short-term traders expect the value of digital assets to continue to grow and exceed $70,000. Recently, the interest rate of funds and the futures market have shown a similar trend.

Funding rates for BTC spikes in October | Source: Arcane Research

Arcane Research pointed out that the increase in open positions and the increase in financing interest rates may indicate that leveraged long trading is currently at historical highs. If so, then if the price of digital assets continues to fall in the next few days, you need to pay close attention.

Large sums of money poured into the market

After breaking through a record high last week, institutional capital inflows also hit a record high. A CoinShares report It shows that in the past week alone, the inflow of Bitcoin was as high as $1.45 billion. Most of the trading volume comes from trading in the ProShares ETF that debuted on Tuesday last week. Another US$138 million flowed into BTC products in other regions.

Bitcoin price chart on TradingView.com

BTC price falls below $59,000 | Source: BTCUSD on TradingView.com

The sentiment on Wall Street began to shift to the top cryptocurrencies on the market.data show The number of Wall Street brokers interested in BTC and the market has soared from 5% at the beginning of the year to 15% at present, and they said that they are beginning to invest in BTC more seriously.

Related Reading | Analysts believe that the bottom of Bitcoin is $50,000, and that’s why

The overall market sentiment remained optimistic, setting a record high last week. However, falling prices have led investors to be more cautious when trading cryptocurrencies. Before the opening of mid-week trading, the price of Bitcoin hit $58,000 in the early hours of Wednesday morning.

Featured image from iStock, charts from Arcane Research and TradingView.com

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