- Bitcoin’s price has surged by over 6% in the last 24 hours, sparking a flurry of trading activity in its derivatives market.
- If the bullish momentum continues, Bitcoin could potentially rally past the $65,000 price level.
- However, a few key factors need to pan out for this bullish projection to materialize.
Bitcoin’s recent price surge has sparked a flurry of trading activity, with the potential to rally past $65,000 if the bullish momentum continues. However, a few key factors need to pan out for this bullish projection to materialize.
Bitcoin’s Price Surge and Its Implications
Bitcoin’s price has risen by over 6% in the last 24 hours, leading to a notable change in its funding rate from negative to positive on Binance. Funding rates are a mechanism used in perpetual futures contracts to ensure that the contract price stays close to the spot price. When an asset’s contract price is higher than its spot price, traders who hold long positions pay a fee to traders shorting the asset. Conversely, negative funding rates are recorded when the asset’s contract price is lower than the spot price. In this case, short traders pay a fee to traders holding long positions.
What Does This Mean for Bitcoin’s Price?
A sudden shift from negative to positive funding rates suggests a strong demand for long positions, which is considered a bullish signal and a precursor to an asset’s continued price growth. Bitcoin’s funding rate on Binance closed on 3 May at a year-to-date low of -0.008%. However, after the price initiated an uptrend to climb by over 6% in 24 hours, its funding rate on the leading exchange changed to positive. This indicates that there were more long than short positions in Bitcoin’s derivatives market.
What to Look Out For
Bitcoin’s price surge has led to a rally in trading activity in its derivatives market. Trading volume in that market had a cumulative figure of $78.05 billion over that period, with the same climbing by 30%. Signaling that market participants are opening new trading positions, Bitcoin’s futures open interest registered a 7% uptick in 24 hours. If this bullish momentum is sustained, Bitcoin’s next price point could be $65,050. However, if the bears re-emerge and put pressure on its price, the bullish projection will be invalidated, and Bitcoin’s price could fall under $60,000.
Conclusion
Bitcoin’s recent price surge and the subsequent change in its funding rate from negative to positive suggest a bullish outlook for the cryptocurrency. However, this projection is contingent on the continuation of the current bullish momentum and the absence of bearish pressure. Market participants should keep a close eye on these factors to make informed trading decisions.
