Market Correction Or Bull’s Strategy, Why this Bitcoin Dip Might be Bullish And Not Bearish?

By Prashant Jha and Sunil Sharma
Published January 22, 2021 Updated January 22, 2021
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Market Correction Or Bull’s Strategy, Why this Bitcoin Dip Might be Bullish And Not Bearish?

By Prashant Jha and Sunil Sharma
Published January 22, 2021 Updated January 22, 2021

On-chain Bitcoin metrics suggest that the price correction might play in bitcoin’s favor as whale accumulation has seen a significant surge over the past couple of days. Bitcoin price correction of 13% yesterday took it to below $30,000 level for the first time in 3 months, raising speculation about a long due market correction.

Why This Might be Best Entry Point for Bitcoin Bulls?

Blockchain data analytics firm Santiment shared that the ratio between the Bitmex long shorts has neutralized after several days of longs dominating over shorts. This is good news for whales as it has reduced the growing premium on exchanges created due to excessive buying pressure.

If bulls were to take Bitcoin long positions this is an opportunity they will not miss as they no long have to pay for shorts. 

Funding Rates on Exchanges Turns Negative

Apart from the lowering premium rates and growing whale addresses in the wake of yesterday’s crash, the funding rates on exchanges have finally gone negative suggesting a building bullish sentiment.

if funding is positive, longs are paying shorts. if it is very high (>.1%) it means the market is disproportionately long and there is a lot of incentive to be short, so generally, you’d expect a correction of some sort. but none is given and the price could continue to go up a lot

Bitcoin’s current funding rate on Binance has gone down below 0.1% currently at 0.0471 levels. The last time when bitcoin funding rates registered such a cool-off price soared to new all-time-highs and the building bullish momentum could very well play in bitcoin bulls’ favor.

Source: Defirate

The top cryptocurrency is currently trying to build strong support at $30,000 to make a move upward. Throughout this bull, season bitcoin has managed to overcome most of the resistance up to $40,000 with ease before registering a couple of price corrections of up to 23%.

Price corrections and market pullback are part of a bull run where many believe that these market shakeups help in indicating weak hands who bought in because of the hype and wanted to make quick money. With most of the exchange premiums now gone, and liquidity of exchanges nearing dry, bitcoin bulls might take charge again after almost two weeks.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Prashant Jha
1202 Articles
An engineering graduate, Prashant focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.

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