Bitcoin (BTC) achieved its highest daily close in over two years on February 20th. However, it faced resistance at the $52,500 level and was rejected below $51,000 on February 23rd.
The funding rate for Bitcoin futures contracts briefly showed an excess of demand for short positions on February 22nd, leading to speculation about potential further bearish momentum.
Despite a 33.5% year-to-date gain in 2024, some analysts believe that the $1 trillion market capitalization at $50,930 could represent a local top. While this level does not have any inherent significance, it has attracted attention from mainstream media, potentially causing fear among investors.
The inflow of Bitcoin into spot Bitcoin exchange-traded funds (ETFs) is likely to influence the price of BTC. On February 22nd, there was a net inflow of $251 million into US-listed Bitcoin ETFs, reversing the $36 million outflow observed on the previous day.
Predicting demand for Bitcoin ETFs is nearly impossible, so traders should focus on trading metrics to assess if there is a bearish sentiment. The funding rate for Bitcoin perpetual futures turned negative on February 22nd, indicating a lack of demand for leverage longs. However, fluctuations in funding rates are common as market makers take advantage of specific snapshot times for profit.
To confirm whether the absence of demand for leverage longs accurately reflects the market’s condition, it is important to consider other indicators such as the demand for stablecoins in China. The premium of USD Coin (USDC) stablecoin versus the official yuan rate in China has remained above 2% since February 12th, indicating retail money entering the cryptocurrency market.
Despite recent price gains, Google search trends for ‘buy Bitcoin’ show a lack of interest from retail traders. However, this data also suggests that a new wave of investors driven by FOMO (fear of missing out) may still enter the market.
Overall, the slightly negative futures funding rate for Bitcoin futures should not overly concern bullish investors. This article does not provide investment advice, and readers should conduct their own research before making any decisions.