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Bitcoin currently appears to be taking a breather after hitting a new all-time high (ATH) above $109,000 earlier this week. So far, the asset has seen slightly reduced upside momentum, with the price hovering just above $104,000.
However, despite slowing upward momentum, Bitcoin’s recent performance has sparked renewed interest in the market. CryptoQuant analyst Burak Kesmeci recently shared this insights into Bitcoin’s price behavior and key market indicators, shedding light on possible future movements.
In a recent post on the CryptoQuant QuickTake Platform, Kesmeci’s analysis focused on Binance Bitcoin Funding Rates, a metric that provides notable clues about market sentiment and dynamics.
By reviewing historical data from past bull cycles, he identified three distinct phases that can serve as a framework for interpreting the current market environment.
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What’s next for Bitcoin based on funding rates?
According to Kesmeci, Binance Bitcoin Funding Rates have gone through three distinct phases during the 2020-2021 bull run:
Phase 1 (July 2020): Financing rates remained stable at 0.01 for weeks before demand soared. This phase acted as the ‘calm before the storm’ and led Bitcoin from $9,000 to $12,000 as funding rates rose to 0.10.
Phase 2 (November 2020): After an initial rally, Bitcoin experienced a correction. Funding rates briefly turned negative before turning positive, supporting Bitcoin’s climb from $12,000 to $19,000.
Phase 3 (December 2020): As Bitcoin surpassed its previous highs and crossed the $60,000 mark, funding rates rose significantly, reflecting strong market support.
Currently, Kesmeci notes that Binance Bitcoin Funding Rates are at the base level of 0.01 – consistent with the early stages of a bull cycle. The analyst wrote:
Analyzing recent data, I believe we have completed the first two phases of this bull cycle. For the third phase, I will keep a close eye on whether the Binance Bitcoin Funding Rates are higher than 0.01.
The analyst said a sustained rise above the 0.01 level would indicate increased activity in the futures market and could lead to another significant upward move.
However, Kesmeci also warns that increased funding rates are often unsustainable, and markets tend to correct through long squeeze events that restore equilibrium.
Key statistics and differences in the market
In a separate analysis, another CryptoQuant analyst said TraderOasis explored several critical metrics, including the Coinbase Premium Index, open interest, and funding rates. These indicators provide a picture of Bitcoin’s market health and its potential direction.
TraderOasis highlighted a difference between the Coinbase Premium Index and Bitcoin’s price movement. While assets reached a new peak above $109,000, the Coinbase Premium Index formed a lower high. This lack of coordination led to concerns about the sustainability of current price developments.
Furthermore, a divergence between open interest and price also suggested that the market may not have the robust foundation needed for sustained upside momentum. According to TraderOasis, a healthy uptrend requires these metrics to become more closely aligned, which would indicate strong investor confidence and a stable market structure.
Looking at funding rates, TraderOasis noted recent bearish sentiment among traders. However, he noted that such conditions often precede sharp price movements.
The analysis suggested the possibility of an initial upward spike to shake out bearish positions, followed by a subsequent pullback. If this pattern materializes, it could set the stage for a more sustainable long-term uptrend.
Featured image created with DALL-E, Chart from TradingView