One key metric for the top crypto by market cap, Bitcoin (BTC), is flashing bearish, according to a leading crypto analytics firm. According to Santiment, Bitcoin’s funding rate is on the verge of turning negative, indicating a market downtrend.
Crypto investors can take leveraged long or short positions in never-ending futures contracts. In order for markets to remain funded, periodic payments based on the difference between the perpetual contract market and the spot price, known as the funding rate, are required.
“We can zoom in on just Bitcoin’s funding rate on Binance, the largest platform for perpetual contract rates,” Santiment says. Traders are currently looking as long as they have been for the past month. And, with prices historically moving in the opposite direction of funding rates, this is a little concerning.”
Santiment is also monitoring social media trends, which some traders use to forecast Bitcoin’s price movement. “Looking first at social data, we see a trend that you’ll want to see if you’re a crypto bull.” Over the last five weeks, traders have gradually become less optimistic about the top crypto assets. We examined years of data and discovered that historically, prices move in the direction of the crowd’s lowest expectations. When traders express increasing skepticism, the likelihood of further price increases.”
However, Santiment claims that overall, social media platform discussions are declining.
“Right now, we can see that the crowd is producing fewer BOTH bullish and bearish candles. In fact, there are fewer people participating in discussions on Twitter, Discord, Telegram, and Reddit now than at the start of the year. This drop simply indicates that the audience is at a loss for words. In general, declining crowd interest even as prices rise indicates some skepticism.”