Bitcoin (BTC) price rose 28 percent to reclaim the $ 57,000 level on March 10, after falling to the $ 43,000 local low on Feb. 28. The massive cashback of $ 5.9 billion stemming from excessively long positions between February 21-23 was overwhelmed. Futures contracts hit an all-time high of $ 20.3 billion.
Unlike the previous time, Bitcoin rose to $ 57,000 this time, showing that individual investors are not affected by FOMO (fear of missing the opportunity), at least in terms of futures and volume indicators.
Spot trading volumes stagnated as the funding rate remained neutral, indicating a healthy growth in the amount of open positions in futures.
As shown above, the open position of total futures in BTC rose to an all-time high of $ 20.3 billion. Although the long and short positions match, this is generally perceived as bullish. On the other hand, it should be considered as a slight warning since a high funding rate in continuous futures trades followed the increase in this data.
Funding rate neutral
Continuous futures; Thanks to their liquid structure and the ability to manage the last transaction date, it is the preferred tool for individual leveraged trading traders.
To ensure a balanced risk management, derivatives exchanges charge every eight hours from either permanent long-term (buyers) or short-term (sellers) investors. Known as the funding rate, this indicator turns positive when a long position is found that demands more leverage.
Long positions with insufficient margin often turn into cash as they are forcibly terminated. Excessive leverage is therefore the primary catalyst for significant price corrections.
As stated above, the 8-hour wage reached 0.2 percent at the end of February and was around 19.7 percent per month. This rate is quite costly for long-term transactions, but this effect disappeared when the bitcoin price fell below $ 48,000 on February 22.
On the other hand, the current 0.05 percent funding rate per 8 hours is considered the standard, and healthy markets seek this level. This indicator equals a 4.6 percent monthly fee and should not be a problem for leveraged long products.
Spot currency volume did not rise
Spot currency volumes would have been positively affected if individual FOMO had stepped in as Bitcoin approached its all-time high of $ 58,300.
As shown above, the most recent 5-day volume average of $ 8 billion has remained fairly stable compared to the past few weeks. As such, there is no evidence that individual traders are focusing on spot BTC or perpetual futures contracts.
These data indicate that corporate customers are heavily accumulating BTC, regardless of their earnings of 70 percent year-to-date. It turns out that there is room for more price increases than Bitcoin.
While multiple analysts have suggested that this activity will trigger rapid purchases by individual investors, there is currently no clear evidence of this.
Digital Currency Group’s decision to buy a $ 250 million Grayscale Bitcoin Trust stock will likely bring some relief. The same can be said for JPMorgan’s cryptocurrency risk basket to be available soon.
These developments can be evaluated by the individual investor as the “approval” of one of the world’s largest banks.
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