Factors Behind Decline
The bitcoin funding rates had plummeted due to the sell-offs that were recorded on Monday night. Most notably had been the plunge in crypto exchange Bybit which had declined to its three-month low of -0.0378%. It represented one of the largest declines of all cryptocurrency exchanges, of which Binance’s levels had stopped at 0.01378%. This sent funding rates to February 2nd levels, although stopping at a higher low compared to the carnage witnessed on May 12th.Related Reading | Bitcoin Miner Revenues Stay Low As Price Decline Continues
BTC funding rates see sharp decline | Source:Funding rates on the Binance exchange have now been at the neutral to negative levels for half a year now. This is a new record for the exchange after enjoying some of the best months in the year 2021. The funding rates overall have been in the neutral to below neutral levels for the better part of 2022 and this does not seem to be changing anytime soon.
Bitcoin Trend After Decline
The decline in the funding rates coincided with the decline in the price of the digital asset. Bitcoin which had been making steady gains had lost all of it on Monday and returned to the $29,000. However, this would not hold for long as the digital asset would start a reversal that would put it back above $30,000 by the end of Wednesday.BTC settles above $30,000 | Source:
This recovery is also credited to the fact that investors are returning back to BTC to seek safe haven. Altcoins had been the winners of the 2021 bull rallies but with the 2022 bear market had come massive losses and as such, investors had moved on to strong digital assets such as bitcoin.
Related Reading | U.S. Macro Pressure Responsible For Entire Bitcoin Downtrend
With this, bitcoin is now trading above its 20-day moving average but continues to lie below its 50-day moving average. This indicates that bears still largely maintain their hold on the market but a turn in the tide may be coming if there is significant buy pressure in the market.
Bitcoin is trading at $30,475 at the time of this writing. It is maintaining its recovery trend in the early hours of Thursday. However, with the opening of the U.S. trading hours, more sell-offs are expected, leading to a decline in price.Featured image from PYMNTS, charts from Arcane Research and TradingView.com
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