A week ago, the CME FedWatch Tool revealed a 17.7% probability of a 25bps interest rate hike during 28th October’s FOMC meeting. At the time of writing, that probability had risen to 27.7%.
Bitcoin’s [BTC] funding rates on Binance fell to -0.0073%, reported crypto analyst Darkfost. Negative funding rates revealed that a majority of market participants were positioned bearishly.
The last time this happened was in June, when Bitcoin’s price was around $62K. Here, it’s also worth noting that the analyst drew attention to the negative macroeconomic news that both the CPI and PPI data came in hot earlier this week.
It contributed to the rising rate hike odds, with Bitcoin in the middle of a correction towards $80K too.
A closer look at BTC derivatives data
News that inflation had accelerated to 3.7% year-on-year in September, up from 3.4% in August and higher than the 3.6% market expectations, led to a Bitcoin price slide to $80.3K.
And yet, the 24-hour growth in Open Interest, denominated in BTC, rose from -3.0% to 4.6%.
The analyst also found that across all exchanges, the funding rates had been slightly positive during the price drop. Rising OI during a price slide highlighted that more market participants were willing to use leverage. It also underlined the risk for long positions if the price continues to fall.
Delta growth rate points to potential for Bitcoin recovery
Now, while the funding rate was negative, showing a bearish bias, it is at moments when the market consensus seems to be one way that a trend reversal tends to happen.
The Delta Growth Rate metric combines the market cap and realized cap growth to combine BTC’s price accumulation and the accumulation of onchain value. Negative values show potential undervaluation and weaker speculative activity.
The metric has been negative all year. However, it has shown signs of improving in recent weeks, according to crypto intelligence platform Alphractal.
It was not enough to signal a structural trend reversal, but it did point to improving market dynamics. It remains to be seen if Bitcoin’s correction towards $80K is over and if buyers will step in to keep the momentum going.
Final Summary
- Bitcoin funding rates on Binance were negative, spurred by negative inflation news and rising rate hike odds.
- The Delta Growth metric, which was still negative, has managed to push higher in recent weeks to signal improving market dynamics.