Bitcoin Bulls Scale Back Leveraged Bets, Post-Halving Demand Cools
Highlights
- Bitcoin funding rate turns negative for the first time since October 2023, indicating decreased demand for futures contracts.
- Decline in US spot-Bitcoin ETF inflows and wavering institutional interest contribute to market consolidation.
- Despite bullish outlook, uncertainty persists as Bitcoin struggles to break resistance at $67,000, triggering potential "buy the dip" sentiment among traders.
Bitcoin traders have significantly decreased their bullish bets on the cryptocurrency, evident from the negative Bitcoin funding rate. This negative rate, observed for the first time since October 2023, points towards a notable decline in demand for Bitcoin futures contracts.
Several factors contribute to this moderation in Bitcoin demand, including diminishing net inflows to US spot-Bitcoin ETFs and the limited impact of the recent halving event on Bitcoin’s price. Additionally, geopolitical tensions in the Middle East and potential delays in Federal Reserve rate cuts have further subdued buyers’ enthusiasm for the cryptocurrency.
Implications of Decreasing Bitcoin Funding Rates and Inflows to US Spot-Bitcoin ETFs
The decline in Bitcoin funding rates, which peaked in March but now sit below zero, signifies a notable decrease in traders’ inclination to open long positions. Analysts foresee that this streak of neutral-to-below-neutral funding rates may lead to further price consolidation within the Bitcoin market.
Moreover, the substantial decrease in daily inflows into US spot-Bitcoin ETFs compared to March indicates a diminishing interest in crypto-related exposure among US institutions. This sentiment is echoed by the decline in open interest at CME Group’s Bitcoin futures market, highlighting wavering interest in cryptocurrency exposure and hedging among institutional investors in the United States.
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Market Outlook and Investor Sentiment
Despite the recent challenges, investors maintain a bullish outlook on Bitcoin’s future, particularly following the recent halving event, with expectations of a breakout above $70,000. However, uncertainty and impatience persist among investors due to the ongoing struggle to discern a clear direction for Bitcoin’s price.
The resistance observed at $67,000 suggests that Bitcoin may need to surpass additional liquidity levels to validate an uptick beyond $70,000. Wednesday’s drop in Bitcoin price to $64,295 could potentially instigate a “buy the dip” campaign among traders, although the possibility of further decline to $60,000 remains a concern.
Also Read: BNB Update: Top Reasons Why BNB Might Hit $700 Soon
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