As Bitcoin Breaks $57k, Quant Explains Why It Could See A Pullback Here
13 October 2021 - 6:00AM
NEWSBTC
As Bitcoin rallies past $57k, Quant explains using on-chain
analysis why the cryptocurrency may see a pullback here. Bitcoin
Funding Rate And Futures Open Interest Show Rising Values As
explained by an analyst in a CryptoQuant post, some BTC indicators
are showing values that have historically signaled that a
correction could be coming soon. The first metric of relevance is
the Bitcoin funding rate, which is defined as the periodic payment
that futures contract traders have to pay. Positive values imply
most traders are bullish and long traders are paying this fee to
short traders. While negative values mean just the opposite;
traders are bearish on Bitcoin and short traders have to pay long
traders. The other indicator is the futures open interest. This
metric shows the total number of futures contracts that are open at
the end of the trading day. Here is a chart showing the trend in
both these indictors for Bitcoin: The funding rate and futures open
interest vs the BTC price | Source: CryptoQuant As the above graph
shows, both the indicators have been observing a rise in their
values recently. The quant has marked instances where similar
values were seen on the chart before. Looks like when such a trend
in these metrics has been seen before, a correction has followed
soon after. Related Reading | Bitcoin Eclipses Trillion-Dollar
Market Cap on Equity ETF Approval – Crypto Weekly Roundup, October
11, 2021 Also, it seems like both the long-term holders and
short-term holders are in profit right now, as the below chart
highlights: The long-term SOPR and the short-term SOPR | Source:
CryptoQuant Both long-term and short-term Investors being in such
profit means they are becoming more likely to take some profits at
this level. Related Reading | On-Chain Data Shows Bitcoin
Miners Hold Off On Selling Despite BTC Rallying Above $57k This
fact combined with the rising funding rates and futures open
interest makes the Quant believe that BTC could see a pullback in
the short term soon. BTC Price At the time of writing, Bitcoin’s
price floats around $56.9k, up 14% in the last seven days. Over the
past thirty days, the crypto has gained 24% value. Here is a chart
showing the trend in the price of BTC over the last five days:
Bitcoin's price shows a strong move up as the coin breaks $57k |
Source: BTCUSD on TradingView BTC has continued its climb up in the
last few days as the coin now rallies above $57k. It’s unclear at
the moment if the crypto can keep this momentum up, but if the
funding rates and futures open interest is anything to go by, the
market may be leading to a correction soon. Long term indicators,
however, still remain bullish. Featured image from Unsplash.com,
charts from TradingView.com, CryptoQuant.com
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