Bitcoin is still stable at the time of writing, but is under massive selling pressure after the August 27 liquidation. Technically, there is some weakness.
However, this outlook will change when Bitcoin bulls push prices above the immediate resistance level at $66,000. This reaction point represents the high of August 23, and the subsequent rally will confirm the high that occurred on August 8.
Binance traders are pessimistic
Before then, traders were cautiously optimistic, acknowledging Bitcoin’s fragile nature and historical volatility. Although prices stabilized at spot market prices, an analyst at Express suggested that Bitcoin prices could stabilize at lower levels. Notes Traders on Binance, the largest exchange by number of clients, are primarily pessimistic.
Based on the analyst’s assessment, more traders are not selling the currency, a net negative development for the world’s most valuable currency. As more retail traders place negative bets, the currency could fall, confirming the losses it suffered on August 24.
A shift in sentiment in favor of sellers occurs when most traders are neutral on the currency. According to CMC Cryptocurrency Fear and Greed IndexTraders took a wait-and-see approach when writing on August 28 and were mostly neutral.
This has been the prevailing sentiment since the price plunge in early August when most traders rushed out, pushing sentiment into the most “fearful” territory since early September 2023. Looking at the sentiment chart, the only time traders were particularly greedy over the past year was when Bitcoin surged to all-time highs, rising to $73,800.
Therefore, if prices are weak and sentiment is neutral, it could help support the bulls, at least in the short term. A recovery above $63,000, which would help reverse the losses of August 27, could boost demand. This expansion could serve as a building block for further gains above the August 2024 highs.
Why is the funding rate positive amidst the BTC price decline?
Even with optimism, the average funding rate across Binance, Bybit, and OKX is in positive territory at 0.002%. This means that traders using short leverage are getting paid to hold their positions.
This usually means that perpetual contracts are trading at a higher price than the spot market price, a development that could encourage more sellers and support the downtrend.
Financing rates are usually positive when prices are rising, indicating bullish sentiment. They turn negative when prices are falling, meaning that leveraged short sellers must pay out bettors to push prices higher.
Featured image from Canva, chart from TradingView