- An analyst stated that the weighted perpetual futures financing rate for bitcoin open interest (OI) has achieved a positive multi-month high, suggesting a possible short-to-medium-term bullish attitude.
- approximately the last 24 hours, there have been approximately $93 million worth of bitcoin liquidations—mostly short positions—amidst increased market volatility.
An analyst claims that the weighted perpetual futures financing rate for bitcoin open interest (OI) has hit a multi-month high, indicating possible short- to medium-term optimistic mood.
At 0.012%, the OI-weighted funding rate is at its lowest since July 27, when bitcoin experienced a brief spike to $68,000. But after the highly leveraged market was cleared out, the largest digital asset by market capitalization experienced a significant 22% price correction at the start of August.
Although a positive financing rate typically points to favorable market circumstances, YouHodler Chief of Markets Ruslan Lienkha cautioned that it should be evaluated accordingly.
Because the cryptocurrency market is so unstable, a local peak in the positive funding rate could indicate a bullish trend in the short to medium term, but it shouldn’t be depended upon for long-term forecasts, Lienkha said.
Lienkha claims that because traditional markets are linked to the slower-moving real economy, funding rates in these sectors—such as commodities—often mirror long-term patterns. But as the YouHodler researcher noted, the cryptocurrency market operates in a different way.
He claimed that because cryptocurrencies are not directly linked to real economic activities, market mood might change considerably more quickly. According to him, this makes funding rates in cryptocurrency markets less stable as a long-term indicator than in other asset classes.
Growing funding rates in the context of more liquidations
Increased market volatility coincides with the financing rate increase, resulting in large liquidations. According to Coinglass statistics, almost $93 million worth of bitcoin positions were liquidated in the last 24 hours, with $83 million of those positions being short bets. Given that traders with short positions were compelled to liquidate their holdings when the price of bitcoin recovered, this suggests a spike in bullish bets.
Over $240 million was liquidated in the larger cryptocurrency market at that time. Ether, the second-largest cryptocurrency, had $50 million in liquidations and $43 million in short positions.
Bitcoin has broken above $65,000 after consolidating over the weekend. In the last few hours, it has increased by 6% and beyond its 200-day moving average. Ryan Lee, Chief Analyst at Bitget, said that traders are keeping a close eye on this breakthrough, especially in light of the previous few unsuccessful attempts to break over this crucial level. The question now becomes whether bitcoin can maintain its current high trajectory or see another decline.
Lee outlined other reasons for the confidence around the current price movement of bitcoin. Bitcoin’s breakthrough above $65,000 is noteworthy, particularly in light of the recent coin accumulation and the resurgence of optimism surrounding the U.S. presidential election.
Good inflation data elevates mood in the market
Positive U.S. Producer Price Index (PPI) inflation data also aligns with the bitcoin market surge. The PPI for Friday was 0%, which was less than the optimistic 0.1% estimate and suggested that inflationary pressures were abating. The core CPI, which does not include volatile goods like food and energy, also came in below forecast, at 0.1% as opposed to the 0.2% projected. The 1.8% year-over-year PPI rate supported market confidence in riskier assets, such as cryptocurrency.
Positive inflation numbers, according to Lee, might act as a spark for bitcoin’s continued ascent.
The prior CPI publication had raised concerns about inflation, which the PPI report helped to reduce. According to Lee, this has bolstered the recent gain in bitcoin and may open the door for a year-end spike.
Lee anticipates that by year’s end, the price of bitcoin will range between $50,000 and $80,000, with larger swings perhaps occurring in the first quarter of 2025.
We may witness additional upward acceleration if important economic indicators hold true and bitcoin breaks through its present resistance levels, he added, particularly when a number of market factors come into play.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
