The Bitcoin reward for miners was reduced by half during the latest halving on April 20, 2024. This development has brought renewed enthusiasm to the crypto market. Although there was a temporary decrease in a significant futures marker, the majority of market signals point towards an uptrend emerging.
At Kaiko, a company that offers market data for crypto derivatives and futures, their analysts noticed a change in the Bitcoin funding rate prior to the halving event. The funding rate represents the fee exchanged between investors holding long and short positions in Bitcoin futures contracts.
A negative sign on a rate implies that investors holding short positions are making up for those with long positions, possibly suggesting a pessimistic viewpoint. Remarkably, Bitcoin’s funding rate turned negative for the initial time in 2021 on April 18th, merely two days prior to the halving event.
Bitcoin Bounces Back With Renewed Bullishness
Despite the temporary bearish outlook, there’s now a stronger feeling of optimism taking over. After the halving event, Bitcoin’s funding rate bounced back quickly and is currently at +0.0051. This indicates that long positions are once again favored, signaling a more bullish market attitude.
Starting from late 2023, the funding rates for Bitcoin perpetual contracts have been below zero for the first time during the approach to the upcoming halving event.
— Kaiko (@KaikoData) April 24, 2024
An additional piece of good news for Bitcoin’s optimistic perspective is the surge in its Open Interest (OI), which signifies the current value of outstanding futures contracts. Although there was a decline last week, OI has bounced back above $17 billion, demonstrating ongoing investor involvement in the Bitcoin market.
Halving Impact Exceeds Historical Trends
An intriguing implication of Kaiko’s research is that the current bitcoin halving may be having a more favorable effect on its pricing than in past occurrences.
When the report was written, Bitcoin had risen by 2.8% in the time since the most recent halving. This increase surpassed the price jumps seen right after the 2012, 2016, and 2020 halving occurrences. Although there was a minor price drop afterwards, Bitcoin is still approximately 3% higher than it was before the halving event.
Yet, it’s important to note that analysts advise against jumping to final conclusions based on the preliminary data. Keep in mind that the value of cryptocurrencies can be unpredictable, and brief price changes are a natural part of the market.
Based on historical data, some analysts have noted that price hikes after Bitcoin’s halving events have frequently been succeeded by phases of stabilization or adjustment. However, it may take several months before the full influence of the halving on Bitcoin’s future pricing trend becomes clear.
Bullish Sentiment Fueled By Macroeconomic Factors
Some analysts argue that there are economic factors beyond just technical indicators that are fueling the recent optimism towards Bitcoin’s price rise.
Some investors are drawn to certain assets during times of global price increases and political instability because they believe these investments protect them from inflation. One such asset is Bitcoin, which has a limited supply thanks to its built-in halving mechanism.
Another indication of Bitcoin’s promising future is the rising number of institutions embracing it. Notable financial entities are seriously considering providing Bitcoin access to their customer base, indicating a strengthening belief in this digital currency.
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2024-04-25 09:40