- A decline in funding rates and OI suggested a move away from overleveraged bullish traders
- The market sentiment changed from extreme greed to greed
Bitcoin [BTC] According to CoinMarketCap, it has retreated from its previous all-time highs (ATH) this week, falling by 3.23% to the $67,000 zone. Currently, bullish market participants are eagerly awaiting a recovery to $73,000 – a level last reached in mid-March.
But while the king coin remains stagnant on the charts, some of its market indicators are still flashing green.
The funding rates are normalizing
According to JA Maartunn, a contributor to on-chain analytics platform CryptoQuant, Bitcoin funding rates fell sharply over the week. In fact, at press time, it was at a level he considered “neutral.”
Source: CryptoQuant
Typically, falling funding rates indicate that overleveraged, bullish traders are being kicked out of the market. As BTC hit its new high in mid-March, funding rates skyrocketed, a sign of an overheated market. However, with funding rates normalizing and prices still hovering around $67,000, there is now scope for new long positions to enter the market, paving the way for a continued push north.
The 11 percent drop in open interest (OI) in Bitcoin futures over the week, according to AMBCrypto's analysis of Coinglass data, also reflected exits from overleveraged long positions.
The euphoria wears off
The slowdown was also evident over the week by the shift in market sentiment from “extreme greed” to “greed,” according to the Crypto Fear and Greed Index. When the market becomes extremely greedy, it usually means a correction is due.
Source: Crypto and Fear Index
Read BTC price prediction 2024-25
Another bullish trigger for Bitcoin?
What could benefit Bitcoin is that bankrupt crypto lender Genesis has completed the sale of shares of its Grayscale Bitcoin ETF (GBTC) worth more than $2 billion. Genesis has primarily driven outflows from GBTC in recent weeks, leading to a correction in Bitcoin.
However, with Genesis' reprieve, GBTC outflows could slow significantly, allowing other ETFs to offset this with high inflows, potentially causing Bitcoin to rise again.
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