Buy $GGsBitcoin’s (BTC) Recovery May Only Be Temporary, Futures Market Shows
Bitcoin (BTC) bounced back from a one-month low this week, regaining a key support level as sentiment improved. But forward trades of the token showed little bullish sentiment, indicating that it may be set for more losses.
BTC jumped nearly 7% from its April lows, and was last trading around $41,000. A bulk of the token’s gains came from big traders accumulating more BTC at cheaper prices.
The token’s wild swings also caused large liquidations in the futures market, particularly in long positions. But the mass liquidations highlighted another factor in BTC positioning- a large portion of traders appeared to be turning cold on the world’s largest cryptocurrency.
BTC funding rates on a decline
Data from blockchain analytics firm Kaiko showed that perpetual futures markets indicated little bullish demand for BTC positioning. In a tweet, the analytics firm noted that funding rates for both BTC and Ethereum (ETH) were continuing their decline from late-2021.
The firm took an average of funding rates from five derivatives exchanges- Binance, Bitmex, Bybit, Derbit, and FTX. Both BTC and ETH saw their funding rates at a two-month low.
Data from coinglass also shows that funding rates for most tokens are largely negative. A negative funding rate implies that traders broadly expect the crypto market to fall.
CME Group futures also indicate declines in the token over the next few months.
Bitcoin set for more more losses?
Technical indicators show that BTC’s current recovery may only be temporary. The token is likely to tumble further after a brief bounce.
Recent analysis showed BTC is potentially playing out an impulse wave pattern, and could rise as high as $45,000 in the near-term. But the end of the pattern is likely to see the token plummet well below $40,000. A loss in BTC is expected to be echoed across the broader crypto market.
Concerns over rising inflation and a hawkish Federal Reserve had pulled the world’s largest cryptocurrency from 2022 highs earlier this month.
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