After hitting a domestic low of $ 43,000 on February 28, Bitcoin (BTC) rose 28% and returned to the $ 57,000 level on March 10. Collective divestments of $ 5.9 billion occurred February 21-23, due to long overripe ripening. The leverage is long gone, with futures contracts peaking at $ 20.3 billion.
This time, with Bitcoin rising to $ 57,000, there were signs of FOMO retail buying (fear of losing), at least on volume and futures indices.
While the funding rate was stable at neutral levels, the volume of spot loans remained stable and indicated that the recent rise in the open interest rate on futures contracts is good.
As explained above, the total open interest rate for Bitcoin futures rose to a new high of $ 20.3 billion. This event is usually seen as bullish, although long and short positions always coincide. However, the yellow flag should be raised when an increase in this account is followed by a high degree of funding in the eternal future.
Funding ratio is neutral to n
Permanent futures are the preferred tool for retail hedge traders due to its liquidity and convenient expiration management.
To maintain a balanced exposure, derivative exchanges for either long-term futures (buyers) or short selling (sellers) charge a commission every eight hours. This metric, known as the funding rate, will be positive when there are desires that require more influence.
Long positions with insufficient margin are usually closed when their positions are suddenly closed, so overruns are the main catalyst for major price adjustments.
As shown above, the 8-hour commission reached 0.20% at the end of February, which is equivalent to 19.7% per month. This price is very expensive for those with long-term futures contracts, but the effect disappeared when the bitcoin price fell below $ 48,000 on February 22nd.
On the other hand, a current funding rate of 0.05% for 8 hours is the norm and expected for healthy markets. This figure corresponds to 4.6% of the monthly payment and shouldn’t be a problem for orders that were delivered.
The volume of the spot exchange did not increase
If the FOMO retailer started when Bitcoin was very close to $ 58,300, this would have a positive effect on the volume of spot exchanges.
As explained above, the average trading volume of $ 8 billion over the past five days is fairly stable compared to the past two weeks. As such, there is no evidence that retail investors are desperate to purchase spot bitcoin or permanent futures contracts.
This data indicates the possibility of further increases in bitcoin price as institutional customers continue to accumulate bitcoins intensively, despite a 70% increase since the start of the year.
While some analysts may speculate that this activity will lead to quick buying from retail investors, there is currently no conclusive evidence of this.
The Digital Currency Group’s decision to purchase the $ 250 million Grayscale Bitcoin Trust is likely to bring some relief, and the same can be said of the upcoming launch of JPMorgan’s currency risk basket.
Retailers can view the event as a “seal of approval” for one of the world’s largest banks.