According to some experts, Bitcoin‘s condition appears to have improved significantly since it reached over $70,000 in March 2024, with cryptic all-time highs in sight. This optimistic view is based on the observation that funding rates have decreased to normal ranges, suggesting reduced volatility and a decrease in the sense of urgency or fear of missing out (FOMO) among investors.
Funding Rates At “Normal Levels” As FOMO Dissipates
In cryptocurrency perpetual markets, the funding rate represents the exchange fee between traders. This fee amount is decided by market forces and is typically readjusted approximately every eight hours.
Based on the market situation, these fees can have either a favorable or unfavorable impact. Significantly, bulls must pay bears when the price of perpetuals exceeds that of the spot market. Consequently, this fee deterrent diminishes the appeal of buying in the perpetual market and stimulates purchases in the spot market instead. As a result, prices in the spot market converge towards those in the perpetual market.
When Bitcoin‘s prices rise, or “rally,” as they have done since the beginning of the year, people looking to buy (go long) must compensate sellers to prevent price fluctuations. This is explained in the previous text.
At current market rates, or “spot rates,” the cost for leveraged buyers is only slightly less due to a decrease in fear of missing out, or FOMO. However, if prices surge quickly, aiming above previous highs from March 2024, the funding rate is expected to rise and approach levels seen in February and March 2024.
Currently, Bitcoin is being traded for more than $70,800 per unit, and its price chart exhibits a bullish pattern. It’s important to mention that recent losses from April 8 have been countered by buyers.
In order for the upward trend to continue, Bitcoin’s price needs to surpass the $72,500 mark and exceed the April 8 peak with significant trading volume. If this occurs, BTC is expected to climb above $73,800 and enter a new price discovery phase.
Bitcoin Rises After CPI Data In The United States, Institutions Pouring In?
As FOMO (Fear of Missing Out) fades and things return to normal, the analyst believes the coin is now ready to fly higher due to its own internal strength gained from market interest. Following a minor dip on April 9th, the coin rebounded after encouraging news about the US Consumer Price Index was released.
When the high Consumer Price Index (CPI) caused other asset prices to drop, Bitcoin’s price rebounded to its current level. Some analysts believe that the cryptocurrency could gain as risk-averse investors move their funds into it during times of inflation, seeking protection from the rising prices.
Additionally, there is a projected increase in the desire for spot Bitcoin ETFs from analysts, especially as institutions invest. By purchasing shares of these ETFs from companies like Fidelity, the demand for Bitcoin itself could surge, potentially driving up prices further. Furthermore, some analysts are optimistic, believing that Bitcoin’s price will be positively impacted once Grayscale Bitcoin Trust (GBTC) stops selling its coins.
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2024-04-11 20:11