Bitrabo Editorial
Bitcoin is gearing up to revisit the $65,000 price level amidst recent price fluctuations over the past day. Two prominent metrics suggest that a potential rally could be on the horizon for Bitcoin. A crypto analyst highlighted on social media that the Bitcoin funding rate and basis point towards an upcoming positive trend.
Getting Set for Bitcoin Uptrend
A widely-followed crypto analyst, Will Clemente, pointed out on social media that both the funding rate and the 3-month annualized basis for Bitcoin are showing signs of stabilization after briefly dipping into negative territory in recent weeks. This indicates a growing preference for long positions in the asset as investors rekindle their optimism in its future price movements.
A closer look at the data shared by Clemente reveals that the funding rate had been fluctuating in negative territory since late April, hitting its lowest point on April 22. However, a recent uptick in Bitcoin’s price has pushed the funding rate back into positive territory. As per Coinglass data, the BTC funding rate has climbed from -0.0050% on May 4 to the current 0.0090%. Notably, this rise in the funding rate correlated with a price surge for Bitcoin, reaching $64,000 on May 5.
Although the funding rate may appear modest, it signifies a shift in investor sentiment towards positivity. A rise in the funding rate implies that traders with long positions are willing to pay a funding fee to those with short positions. An uptick in this rate indicates a stronger inclination towards maintaining long positions, potentially leading to a price increase for the cryptocurrency.
Similarly, Clemente observed that the 3-month annualized rate for Bitcoin is now showing signs of an upward trend. This implies that more investors are inclined to purchase spot Bitcoin while simultaneously selling a futures contract expiring in three months. Currently ranging between 5% to 10% on platforms like Binance and Bybit, this annualized rate is generally viewed as a bullish signal by many investors.
The resurgence in the total supply of stablecoins suggests that investors are preparing to allocate funds into Bitcoin. On-chain data indicates that wallets holding between 100 and 1,000 BTC have increased their buying activity over the past two months.
Despite the market correction in April, these addresses continued accumulating more Bitcoins. Analyst Willy Woo highlighted that such substantial accumulation within a 2-month timeframe has not been witnessed among “high net worth Bitcoin holders” previously.
As of the latest update, Bitcoin is trading at $62,350.