On-chain data shows the Bitcoin funding rates have remained at positive values recently as the crypto’s price has continued its recovery.
As pointed out by an analyst in a CryptoQuant post, the BTC funding rates have been green recently, but not as positive as back between July 18th to 22nd yet.
The “funding rate” is an indicator that measures the periodic fee that perpetual futures contract traders are paying each other.
When the value of this metric is greater than zero, it means long traders are paying a premium to the short traders right now in order to hold onto their positions. Such values indicate that a bullish sentiment is more dominant in the market currently.
On the other hand, negative values of the indicator suggest the number of shorts are overwhelming that of the longs right now. This kind of trend naturally hints that the majority sentiment is bearish at the moment.
Now, here is a chart that shows the trend in the Bitcoin funding rates over the past couple of months:
The value of the metric seems to have been above the zero mark in recent days | Source: CryptoQuant
As you can see in the above graph, the Bitcoin funding rates have been positive for quite some time now, with a few spikes down into the red region.
This shows that longs have been the more dominant force on the futures market during these last few weeks. This trend makes sense as green funding rates usually follow in periods of climbing prices, while negative rates appear during downtrends as longs get liquidated.
The quant from the post notes that the few red spikes that have been observed recently have turned out to be reliable buying points ever since the crypto first hit $24k again.
The analyst believes Bitcoin could possibly have further room to grow still as while funding rates have been quite positive recently, they are still not as green as between 18-22 July. Back then, the value of BTC hit a local top above $24k.
At the time of writing, Bitcoin’s price floats around $24.2k, up 1% in the last week. Over the past month, the crypto has gained 18% in value.
The below chart shows the trend in the price of the coin over the last five days.
Looks like the price of the coin has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Mariia Shalabaieva on Unsplash.com, charts from TradingView.com, CryptoQuant.com