- King Mint financing rates plunged into the negative zone.
- In the long run, price and OI have gained momentum since the August 17 crash, which experts have taken as a bullish signal.
Bearish clouds continued to loom over Bitcoin’s horizon as the worst crash of the year took its toll on the broader cryptocurrency market.
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Traders bet on price losses
According to a recent post from a popular on-chain sleuth, king coin funding rates dipped into the negative zone, meaning the majority of traders wanted to profit from price drops.
Finance rates are in the negative zone 🔴
This indicates that traders like to speculate on lower prices for Bitcoin.
And I’d like to see it last for a few days.https://t.co/wvV5qHrXxW pic.twitter.com/MLxIwbFxbA
— Maartunn (@JA_Maartun) August 20, 2023
As is known, the funding rates are the periodic payments to short or long traders. These are the primary forces used to maintain the balance between perpetual contract prices and the underlying spot price of crypto assets.
In a bearish market, funding rates are negative, indicating that dominant short traders are paying to long traders.
Research on other key derivatives indicators
While financing rates suggested that prices would fall, the Open Interest (OI) revealed a new set of interesting findings.
Bitcoin climbed to $26,260 in the last 24 hours of trading. This led to a wave of new vacancies. The price increase supplemented by an increase in OI indicated that new money was entering the market. Experts typically consider this a bullish signal.
However, the excitement quickly evaporated as BTC retreated to $26,000 at 11pm ET. As a result, the OI also decreased.
Source: Coinglass
However, a bigger picture revealed that since the August 17 crash, price and OI have gained momentum. This could be taken as a bullish signal as a downtrend would end once all long position holders have finished liquidating their positions.
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The Long/Short Ratio chart told a similar story. Bets on BTC price gains were temporarily higher than those on price losses. However, once the spot price fell, these long traders backed out.
Source: Coinglass
Another range-bound market?
Market sentiment was neutral, according to the latest reading of the Bitcoin Fear and Greed Index. Over the past two months, King Mint has mainly reacted to news about the applications of exchange-traded funds (ETFs) in the spot market.
In the absence of new developments around the same, Bitcoin may once again get stuck in a narrow trading range.
Bitcoin Fear and Greed Index is 38 – Neutral
Current price: $26,190 pic.twitter.com/GsYtRHEMhS— Bitcoin Fear and Greed Index (@BitcoinFear) August 21, 2023