Could This Be The Turning Point For Bitcoin?

Bitcoin

It’s been a wild ride for Bitcoin (BTC) investors, particularly over the past three weeks. After reaching close to $40.000 per coin on May 4, BTC quickly dipped below $27.000 in a matter of days. The market has since stabilized around $30.000, but many are wondering where the flagship crypto will go next.

According to Ali Martinez, a top cryptocurrency analyst, Bitcoin is currently hovering around a major support level where over 1.23 million addresses have accumulated nearly 850.000 BTC between the prices of $29.330 and $30.200. This demand wall suggests that there is strong demand for Bitcoin around this price level and it could act as a support for the cryptocurrency going forward.

Hodlers are hoping that the apex crypto asset will consolidate above the $30K demand wall and then break through the $35.000 resistance. However, if Bitcoin fails to hold the price levels where 850.000 coins were purchased, the top asset class could resume its downtrend and see a retest of the $27K level.

Meanwhile, on-chain data shared by another Martinez tweet suggests that Bitcoin funding rates across all exchanges have remained negative in the past few days, indicating dominance on the part of the shorts.

“This is a positive sign for a potential rebound in $BTC price,” Martinez wrote.

Short positions refer to a trading technique whereby investors bet against the price of an asset, commodity or currency. Essentially, when an investor takes a short position, they hope that the price of the asset will fall so that they can purchase it at a lower price and then sell it back at the current market rate.

Negative funding rates on the other hand, occur when the interest paid on short positions is greater than the interest earned on long positions. In other words, it costs more to maintain a short position than it does to maintain a long position. This situation often arises when there is an increase in demand for an asset (such as Bitcoin) and can indicate that prices are likely to rise in the future.

When negative funding rates persist over a prolonged period of time, it can be seen as a sign that market participants believe that prices will continue to rise in the future.

As such, the recent string of negative funding rates for Bitcoin could be indicative of positive sentiment amongst traders and investors. Consequently, this could bode well for the $552 billion market cap cryptocurrency in the near future.

Price Action

BTC lost 4.45% during today’s trading and changed hands at $29K and change, accelerating its monthly decline to about 30%.

Disclaimer: This article is provided for informational purposes only. It is not intended to be used as investment or financial advice

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About Ron Haruni 1063 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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