On-chain data shows that Bitcoin funding rates have remained on positive levels lately as the crypto price has continued to rally.
Bitcoin funding rates have been mostly positive over the past month
As one analyst pointed out in a CryptoQuant post, BTC funding rates have been green lately, but not yet as positive as they were between July 18-22.
The “funding rate” is an indicator that measures the periodic fee that traders in perpetual futures contracts pay each other.
When the value of this metric is greater than zero, it means that long traders are now paying short traders a premium to hold their positions. Such readings suggest that bullish sentiment is more dominant in the market at the moment.
On the other hand, negative readings of the indicator suggest that the number of short positions is currently overwhelming that of long positions. Of course, this type of trend suggests that majority sentiment is currently bearish.
Now here is a chart showing the trend of Bitcoin funding rates over the past few months:
The value of the metric seems to have been above the zero mark for the past few days | Source: CryptoQuant
As you can see in the chart above, Bitcoin funding rates have been positive for quite some time, with some spikes into the red.
This shows that longs have been the more dominant force in the futures market for the past few weeks. This trend makes sense because green funding rates typically follow periods of rising prices, while negative rates occur in downtrends when longs are liquidated.
The quant from the post notes that the few red spikes observed recently have turned out to be reliable buy points since the crypto first touched $24,000 again.
The analyst believes that Bitcoin could potentially continue to grow as funding rates, while quite positive recently, are still not as green as they were between July 18th and 22nd. Back then, the value of BTC hit a local high of over $24,000.
BTC price
At the time of writing, the price of Bitcoin is hovering around $24.2k, up 1% over the past week. Over the past month, the crypto has gained 18% in value.
The chart below shows the evolution of the coin’s price over the last five days.
It looks like the coin’s price has been trading sideways for the past few days | Source: BTCUSD on TradingView Featured image by Mariia Shalabaieva on Unsplash.com, Charts by TradingView.com, CryptoQuant.com
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