- Bitcoin’s price action has calmed after a strong move lower on the news of the CFTC charging BitMEX and President Trump catching the disease spreading across the globe.
- The cryptocurrency is currently trading in a tight $30 range, indicating that investors are indecisive.
Bitcoin Enters Tight Range as Market Is Indecisive
As noted by a top Bitcoin analyst, the leading cryptocurrency has been trading in a $30-50 range over the past few days as investors have become indecisive. Some think that this price action may stem from the news that the U.S. CFTC is charging BitMEX, which is forcing investors to close their positions on the leading derivatives platform.
Chart of BTC's price action over the past day with analysis by crypto trader Don Alt (@CryptoDonAlt on Twitter). Chart from TradingView.com
What’s Next for BTC?
Trends in the Bitcoin futures markets suggest that it may be bulls that soon take the lead.
Derivatives tracker ByBt is currently reporting that most BTC futures markets are currently printing negative funding rates. The funding rate is the fee that long positions pay short positions on a regular basis to ensure that the price of the future is around the price of the underlying spot market.
Negative funding rates suggest that short holders are more aggressive in their positioning than long holders. While it may seem like this means that Bitcoin may continue its descent due to the prevailing ask, this is not often the case.
Bitcoin often outperforms after a period of negative to neutral funding rates as shorts are under pressure when they have to pay to keep their positions open. The vice-versa is also true: that’s to say, when the funding rates of Bitcoin futures are extremely positive, the cryptocurrency often performs well in the days that follow.
To further contextualize this, the funding rate on OKEx currently is 0.02% per eight hours. This may not sound like a lot but when positions are leveraged and when periods of consolidation stretch out to many days and weeks, this adds up, incentivizing short holders to close their positions.
Fundamentally, Bitcoin is also in a position where it should continue its ascent as per some analysts.
Willy Woo, a leading on-chain analyst, recently commented on BTC’s prospects in spite of the BitMEX news:
“Meanwhile the on-chain fundamentals are showing more new investors are coming in than the mania phase of the last cycle (Dec 2017), without it reflected in price. This is because the unfettered trading games on derivative platforms is holding the price down.”
Woo accurately predicted Bitcoin’s retracement at the end of August.
Photo by Sven Piek on Unsplash Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Bitcoin Enters Tight $30 Range as Investors Become Indecisive
