The data shows that funding rates for Bitcoin have turned positive, a signal that could suggest that market sentiment among traders is optimistic.
Bitcoin financing rates turn positive, while derivatives and cash reserves decline
As can be seen from a CryptoQuant post, funding rates for the BTC market currently appear to be slightly positive.
The Bitcoin funding rates are the payment traders have to pay in order to keep an open position. This additional periodic fee is based on the difference between the perpetual contract market and the spot price.
These funding rates are used by all cryptocurrency derivatives exchanges for perpetual futures contracts. If the value is positive, longs will have to pay a fee on the shorts. If it’s negative, the opposite is true.
Related reading | Three white soldiers: the signal that shows Bitcoin cops are preparing for battle
Because of this, a positive funding rate means that many traders are optimistic as they will have to pay a premium to maintain their positions. In contrast, with a negative funding rate, market sentiment is bearish.
Now here is a graph that shows the trend in funding rates for Bitcoin:
The various indicators seem to be bullish | Source: CryptoQuant
As the graph above shows, the funding rates currently appear to be slightly positive. This could indicate that there is a bullish mood among traders right now.
Also note on the graph that funding rates stayed green in May as BTC hit new all-time highs (ATHs) but a negative spike occurred as the price went down.
In addition to the funding rates, the chart also contains two other indicators: the foreign exchange reserve for derivatives and the foreign exchange spot reserve.
Related reading | Could the new “China model” be the reason the country banned Bitcoin mining?
These two values also seem to be going down. This could be another bullish sign as it could mean investors are now looking to hoard rather than sell.
At the time of writing, Bitcoin is priced at around $ 46,5,000, up nearly 18% over the past 7 days. The monthly profits for the cryptocurrency are 40%.
The following graph shows the trends in BTC price over the past three months:
BTC's price continues on the overall upwards trend | Source: BTCUSD on TradingView.com
Bitcoin has its eye on $ 47,000 as the coin continued to see a sharp upward trend over the past week. It is currently unclear how long crypto can sustain this trend. It is possible that BTC will go down soon, but given funding rates as a guide, the sentiment of many traders appears to be bullish right now.
Featured image from Unsplash.com, charts from CryptoQuant.com, TradingView.com