BTC On-Chain Analysis: Funding Rate Turns Negative as Fear Intensifies

2021-5-26 19:10

The funding rate has turned negative for the first time in more than a month. 

In addition, the Net Unrealized Profit & Loss (NUPL) indicator has crossed below 50 for the first time since October 2020. Both of these are signs of increased bearish sentiment.

Funding Rate

Funding rates show the additional payment that futures trades are required to pay in order to keep an open position. 

A positive funding rate specifies that traders with long positions are obliged to pay a premium to those with a short position. The opposite is true for negative funding rates.

The funding rate can act as a measure of the sentiment of traders towards the market. Positive funding rates suggest that the sentiment is positive, since traders are paying a premium to keep open long positions. 

However, excessively high values have also historically marked tops, signifying a state of euphoria. 

On May 19, the funding rate was a negative 0.108% and dwelled inside negative territory, until May 24, when it turned back positive. Previously, the funding rate had been positive for almost the entirety of the bull run. 

This swift change in funding rates indicates a turn of sentiment from greed to fear. In addition, the exceptionally high negative rate on May 19 could have been a potential sign of a bottom.

Chart By Glassnode Open interest

Open interest shows the total amount of funds that are presently in open futures contract. However, it disregards the direction of these trades, meaning that it does not differentiate between long and short positions.

Open interest usually reaches a high near local tops, since traders show signs of euphoria.

It peaked very close to the April all-time high, being almost $27.5 billion. It has been decreasing since.

The current levels of open interest near $12.5 billion are similar to those in February. Interestingly, the BTC price was also around $38,000 during that time.

Source: Twitter NUPL

NUPL is used in order to determine if the overall market is in a state of profit or loss. This is done by taking the difference of the current price and the price each coin last moved for every coin in circulation. 

More simply, the calculation can be done by subtracting unrealized losses from unrealized profits.

Values in the indicator are shown from -1 to 1. Values above 0 indicate that the market is in profit, since unrealized profits are larger than unrealized losses.

So far, NUPL has moved above 0.75 four times (circled). All of these marked local tops. In the current bull run, it has yet to move above 0.75. 

Chart By Glassnode

Another interesting observation comes from the 0.5 line. 

In the 2017 bull run, once NUPL moved above the 0.5 line, it returned below it twice in order to reset, before resuming its upward movement.

In October 2020, NUPL moved above 0.5 for the first time. Last week’s drop has now taken it back below 0.5. It is possible that the same occurrence as 2017 will happen, in which NUPL has now reset and will move upwards.

Chart By Glassnode

To conclude, the reset in funding rates, suggests that the overall sentiment in the market is ruled by fear. This is also visible in the fear and greed index, which has fallen to its lowest yearly levels.

In addition, the decrease in NUPL suggests that the euphoria in the market is now being replaced with anxiety.

For BeInCrypto’s latest bitcoin (BTC) analysis, click here.

The post BTC On-Chain Analysis: Funding Rate Turns Negative as Fear Intensifies appeared first on BeInCrypto.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Multi Channel Influencer Creater Cloud Funding Platform (MCI) на Currencies.ru

$ 7.82E-5 (+0.00%)
Объем 24H $0
Изменеия 24h: 0.07 %, 7d: -52.90 %
Cегодня L: $7.82E-5 - H: $7.82E-5
Капитализация $102.747k Rank 2192
Цена в час новости $ 0.0136825 (-99.43%)

negative funding rate time intensifies btc on-chain

negative funding → Результатов: 21


Binance Funding Remains Negative, Providing Rocket Fuel for Bitcoin

Bitcoin’s short-term trend has grown somewhat unclear as of late, with the cryptocurrency being unable to extend its momentum past $13,800 This level has historical significance, as it is where BTC’s uptrend stalled back in the summer of 2019 when it rallied The sharp rise in the US Dollar’s value that took place yesterday may have been what sparked this movement Despite it now consolidating at just above $13,000 as bulls and bears reach an […]

2020-10-30 02:00


Bitcoin’s Price is Failing to Convince the Margin Markets That It is Bullish

Bitcoin has been caught within a firm uptrend that has allowed it to shatter its correlation with the stock market as it continues marching higher Despite the overt bullishness of this move, funding rates have been on the brink of being negative on many major trading platforms This shows that demand for short positions remains high, and that traders are widely trying to time its top Furthermore, this trend is observed while looking towards Bitcoin’s […]

2020-10-26 01:00


Bitcoin Could See a Massive Squeeze as Funding Rates Flip “Extremely Negative”

Bitcoin’s price action has been lackluster as of late, providing investors with few insights into the cryptocurrency’s near-term outlook as it consolidates Although from a technical perspective, it remains unclear as to where it might trend in the near-term, there are a few factors that may provide investors with some guidance One such factor that could have some influence over the digital asset is its funding rates, which have flipped negative throughout the past few […]

2020-10-8 02:00


Analyst: Bitcoin Stability Could Help Launch Altcoins Higher in Q4

Bitcoin’s price action has been creating significant fear amongst investors, with analysts and traders widely expecting it to see downside once its ongoing consolidation phase ends. This fear is clearly seen while looking towards BTC’s funding rates, which are extremely negative at the moment as demand for short positions rockets higher. Much of this sentiment […]

2020-10-8 19:00


Negative Funding Could Act as a Launchpad for a Massive Bitcoin Rally

Bitcoin’s recent consolidation phase has come about concurrently with traders stacking up on short positions This indicates that they expect the turbulence within the traditional markets to continue suppressing BTC’s price action, potentially leading it lower in the weeks ahead That being said, this has caused negative funding rates to surge as of late, making it costly to be short Historically, funding rates – when slanted towards one direction for extended periods – work as […]

2020-10-6 02:00


Bitcoin’s Momentum Stalls, But Negative Funding Gives a Boost to Bulls

Bitcoin’s upwards momentum has stalled following the promising push higher seen yesterday This allowed the cryptocurrency’s price to surge up towards $10,800, which is where it met some serious resistance that slowed its uptrend Despite rejecting at this level, the subsequent downtrend has not been that intense, indicating that bulls may still have some underlying strength One analyst is noting that although BTC is beginning to look bearish, the fact that funding rates are still […]

2020-9-26 21:00


Фото:

Bitcoin Funding Rates Flip Negative as Sellers Build Momentum; What to Watch For

Bitcoin has seen some intense turbulence throughout the past day, with the cryptocurrency losing the support it had at $9,400 before plummeting into the $8,000 region Buyers were able to guard against the massive influx of selling pressure, supporting it above $9,000 for most of the day The defense of the upper-$8,000 region has caused the crypto to form a double bottom seen while looking towards its RSI This indicates that the crypto could be […]

2020-6-16 02:00


Here’s Why Bitcoin Didn’t Bottom at $3,800 According to a Top Analyst

While Bitcoin seemingly remains in a bear trend, sentiment has spread over the past few days that the cryptocurrency market has bottomed; analysts cite the fact that BitMEX funding rates are decisively negative, suggesting an extreme bottom, along with other technical analysis-based evidence to back their lofty opinion. But according to a top analyst, there...

2020-3-15 22:30