💰Bitcoin Investment Returns Continue to Be Positive
🔥Analysts have noticed that the Bitcoin financing rate has been going down lately, yet it's still going up, according to an article on CryptoQuant Quicktake. The "funding rate" is a metric that measures the current amount of periodic fees being exchanged between futures contract holders.
🔥Long traders are now paying a premium to short investors to maintain their holdings, as shown by a positive value of this statistic. This pattern indicates that the futures market is dominated by positive sentiment.
Conversely, as shorts are now outnumbering longs, the indicator's negative reading suggests that most traders share a pessimistic view.
🔥The following graph shows that the financing rate for Bitcoin has been mostly positive since mid-October, indicating that longs have been the most powerful players in the market.
The indicator's value has significantly dropped from its all-time high at the beginning of the year, due to the very unpredictable price movement that Bitcoin has seen since then.
On the other hand, financing rates have remained favorable as of late, suggesting that traders are still optimistic. For the asset's recovery, this may not be the best situation.
🔥The quant claims that "we need to wait for a capitulation signal from market participants" before the current Bitcoin decline may come to a close. Several occurrences of this kind of bitcoin capitulation signal have been noted in the chart by the expert.
🔥Funding rate increases in the negative direction suggest traders have become too gloomy about the market. It is not unexpected that bottoms have been more likely to form when traders have been strongly negative about the asset, given that Bitcoin has a history of moving against the views of the majority.
