Bitcoin futures funding rates, which involve payments made between short and long traders, may be indicating a potential price correction for Bitcoin in the future. Market analysts believe that this correction could present lucrative buying opportunities for investors.
According to an analyst from on-chain analytics firm CryptoQuant, the record-long positive Bitcoin futures funding rates suggest a strong bullish sentiment in the market. These funding rates represent the periodic payments that traders make to each other based on the difference between the price of the perpetual futures contract and the spot price of BTC.
If the Bitcoin futures prices trade above the spot prices, long traders pay the funding rate to short traders. Conversely, if the futures price trades below the spot, short traders pay the funding rate to long traders.
However, the analyst named Crypto SunMoon cautions that historically, such optimism often precedes price corrections. This implies that the current positive sentiment may not be sustainable in the long run.
Another analyst from CryptoQuant, known as Maartunn, has observed a rising Coinbase Premium, which indicates active buying of Bitcoin by U.S. institutions. The Coinbase Premium refers to the price difference between Coinbase and other global exchanges.
Earlier this week, Greeks Live, a provider of crypto derivatives tools, stated that Bitcoin’s continued decline is causing a significant downturn in the crypto market. Panic is spreading across the market, and futures premium levels are falling as a result.
BTC has experienced a 9% decrease over the past week, reaching a low of just below $65,000 on April 2. It is currently 10.5% below its all-time high of $73,738, which was achieved on March 14. According to market analyst Tony Sycamore from IG, BTC could drop even further in the coming days.
In a recent post, Sycamore predicted a potential drop in BTC’s price to support levels around $60,000 or possibly even lower.
A well-known analyst and trader named Moustache reassured his followers on X that it is normal to see a correction around the all-time high of BTC. He cited a similar situation in 2020 where BTC experienced a correction before embarking on a legendary bull run.
BTC previously pulled back by around 17%, dropping to approximately $61,500 a week after reaching its all-time high. However, it quickly recovered and reclaimed $71,500 in late March before experiencing another decline in April.
Overall, the market sentiment suggests that a price correction for Bitcoin is likely in the near future. However, analysts and traders remain optimistic about the long-term prospects of BTC and believe that this correction could present an excellent buying opportunity for investors.