Bitcoin traders are still bullish despite rout
Amid the tumultuous market conditions, the sentiment for Bitcoin and Ethereum remains optimistic, as evidenced by the continual bullish orientation of the perpetual futures contracts funding rates, a recent analysis from CoinGlass reveals.
These funding rates represent the recurrent fees exchanged between bullish and bearish traders in the realm of perpetual futures contracts. Unlike traditional futures contracts that conclude on a certain date, perpetual futures lack a designated expiration, employing the funding mechanism to closely align the contract's price with the actual market value of the underlying cryptocurrency.
Currently, with funding rates maintaining a positive stance, it signals that traders with a bullish outlook are compensating their bearish counterparts to sustain their positions open. Notably, as of Tuesday morning, the weighted funding rates for Bitcoin's open interest stood at 0.0024%, as per the data from CoinGlass.
This optimistic trend suggests a predominant inclination among traders to initiate long positions over short ones.
According to the activity within Bitcoin derivatives, the market mood appears to lean more towards optimism than pessimism. This tendency not only reflects the current market sentiment but also indicates the confidence among traders holding long positions, believing that their prospective profits will surpass any associated funding expenses.
Moreover, the persistent bullish sentiment within the Bitcoin community is further evidenced by other indicators.
Look Into Bitcoin's founder, Philip Swift, pointed out on Twitter that Bitcoin's recent downturn positioned it near its 128-day moving average—a crucial analytical measure that gained traction during the 2017 boom, often signaling a strong bounce-back point for the cryptocurrency. Swift highlighted that this could potentially provide robust support during bullish phases of the Bitcoin market, mirroring past patterns.
At the moment, Bitcoin's trading price hovers slightly above $65,000, recovering from a recent dip to $64,548.57, marking its lowest point over the previous month.
External factors also contribute to a cautiously optimistic outlook for the crypto sphere.
Wintermute, an algorithmic crypto trading company, recently shared insights suggesting a possible change in direction at the Federal Reserve—known for its crucial role in determining U.S. interest rates. Traditionally, lower rates on treasury bonds drive investors towards higher risk assets, including stocks and cryptocurrencies.
Market dynamics faced a downturn following comments from Neel Kashkari, President of the Minneapolis Federal Reserve, hinting at delayed rate cuts, potentially not before December, contrary to prior expectations for a reduction in September.
However, Wintermute posits that resistance from prominent global central banks, which have commenced rate reductions, like the Bank of Canada and the European Central Bank, could signal a worldwide shift towards more lenient monetary policies, potentially revitalizing bearish market sentiments.
