Bitcoin’s (BTC) Recovery May Only Be Temporary, Futures Market Shows

By Ambar Warrick
April 20, 2022 Updated April 20, 2022
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PlanB Says Bear Market Is Almost Over, Will Bitcoin (BTC) Break New ATH?

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.

BTC, ETH Funding Rates Steadily Decline
Source: Kaiko

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.

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
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.

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