Cryptocurrency analytics firm CryptoQuant has expressed concern over the strength of Bitcoin’s recent move, citing the drop in funding rates as a signal of weak demand in the derivatives market.
Funding rates, which measure the cost of holding a long position in Bitcoin futures, are considered a critical indicator of market sentiment and momentum.
During Bitcoin’s recent rally, funding rates saw a noticeable increase amid the rally, indicating a delayed influx of demand from the derivatives market. However, funding rates have declined sharply since Bitcoin’s decline from the key $108,000 resistance level.
CryptoQuant noted that this decline highlights two key concerns:
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CryptoQuant noted that it is important for Bitcoin to stay above the $90,000 support level. Failure to do so could lead to:
Despite the current challenges, CryptoQuant has highlighted a potential path forward. If funding rates recover alongside strong buying activity, Bitcoin could stabilize above key support levels and potentially resume its upward trajectory.
*This is not investment advice.
Continue Reading: What Do Bitcoin Funding Rates Tell Us? Analytics Company Reveals Critical Level Where BTC Price Should Not Fall
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