Bitcoin (BTC) Recovery May Be Temporary

Bitcoin (BTC) bounced back from a one-month low this week, regaining key support as sentiment improves. But the coin’s futures trade shows little optimism, that it could suffer more losses.

BTC is up nearly 7% from its April low and was last trading around $41,000. Most of the coin’s profits come from large traders accumulating more BTC at a cheaper price.

The intense volatility of the token also causes large liquidity in the futures market, especially in long positions. But the mass liquidation highlights another factor in BTC’s positioning – a large portion of traders appear to be chilling with the world’s largest cryptocurrency.

BTC funding rate is decreasing

Data from blockchain analytics firm Kaiko shows that the perpetual futures market shows little bullish demand for BTC positioning. In a tweet, the analytics firm noted that funding rates for both BTC and Ethereum (ETH) are continuing to decline from late 2021.

The company took the average funding rate from five derivative exchanges – Binance, Bitmex, Bybit, Derbit, and FTX. Both BTC and ETH see their funding rates at two-month lows.

Data from Coinglass also shows that funding rates for most tokens are largely negative. A negative funding rate implies that traders generally expect the crypto market to fall.

CME Group futures also see a decline in the token over the next few months.

Will Bitcoin Lose More?

Technical indicators suggest that BTC’s current rally may be temporary. The coin is likely to fall further after a short bounce back.

Recent analysis shows that BTC is likely to create an impulse wave pattern and could rally as high as $45,000 in the near term. But the bottom end of the pattern could see the coin plummet below $40,000. The loss in BTC is expected to be repeated across the broader crypto market.

Concerns about rising inflation and a hawkish Federal Reserve pulled the world’s largest cryptocurrency from its 2022 high earlier this month.