Recent declines in Bitcoin price It was followed by negative sentiment across several on-chain metrics that are crucial in determining its next course. With key metrics falling, there is speculation that the key asset could see an extended decline in its price.
Market sentiment changes as Bitcoin funding prices fall
As the market is witnessing extreme volatility, ShayanBTC, a connected expert at data analysis platform CryptoQuant, open A worrying shift in Bitcoin market dynamics. Cheyenne BTC reports that Bitcoin funding rates have dropped significantly in the past few days, indicating waning confidence in the asset.
Typically, financing rates rise, which indicates strong demand Futures marketare often necessary to sustain any rise in market prices. At the same time, the sharp decline in financing rates indicates a decline in bullish leverage in the derivatives market, which may reflect the cautious stance of traders in the wake of recent price changes. Simply put, this development highlights the decline in demand in the financial derivatives market.
In the absence of this rise, upward trends may stall. Although this increase does not always have to happen immediately, its absence during a rally raises questions about the strength of the market.
According to the expert, midway through the uptrend in Bitcoin’s recent rally, Financing rates It showed a strong increase, indicating a delay in order flow. However, funding rates dropped significantly, coinciding with Bitcoin’s rejection of the $108,000 resistance level.
This decrease in funding rates means a decrease in traders’ commitment to the derivatives market or capital flows. It also indicates weak upward momentum as there is not enough support to sustain BTC’s upward trajectory.
Moreover, the current situation of financing rates reflects the general market hesitation, especially after the rejection at the $108,000 price level. He should Bitcoin If it fails to hold above the $90,000 level, the expert pointed out two possible scenarios that could happen in the following days.
One result is increased selling pressure caused by decreased investor confidence. Failure to keep more than $90,000 may also cause this Deeper correctionsAnd perhaps test Fibonacci lows and psychological thresholds.
On the other hand, if funding rates rise along with strong buying activity, Bitcoin may stabilize and start rising again. The return of this measure will highlight the renewed bullish sentiment among market participants.
Unrealized profit margin is at a low level
Another metric that fell amid declining price performance is Bitcoin On-chain Trader Realized price And profit/loss margin. Data Julio Moreno, head of CryptoQuant Research, explains that unrealized profit margins for on-chain traders have decreased significantly as BTC faces corrections.
The decline, according to Moreno, is a healthy thing after the notable rally that was sent Bitcoin More than $100,000. Meanwhile, the realized price for traders, which acts as support in bull markets, is $88,000, compared to $93,000.
Featured image from Unsplash, chart from Tradingview.com
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