Bitcoin Weekly Funding Rate Indicates Investor Caution Despite BTC Price Continues To Rise

Bitcoin currently trades above $63,000, yet the futures weekly funding rate suggests caution among professional traders.

Source:tr.cryptonews.com

Despite this caution, Bitcoin surged 9.7% from July 13 to July 15, reaching around $63,500. This rally reversed losses from the past nine days but has not breached the $65,000 resistance level, which has held for four consecutive weeks. Speculation about China potentially lifting its longstanding Bitcoin ban may have contributed to this recovery, though no official statement from the Chinese government has confirmed these rumors.

Bitcoin Derivatives Markets Do Not Indicate Optimism

Although the outlook is positive, including support for Bitcoin from a leading US presidential candidate, BTC derivatives markets are not reflecting the same enthusiasm. Market participants are now questioning whether there's sufficient demand to break through the $65,000 barrier and sustain weekend gains. Analysts have dismissed rumors about China allowing its citizens to freely trade Bitcoin with the local Renminbi, citing the government's agenda to prevent capital flight. Chinese investors are still prohibited from investing in spot Bitcoin and Ethereum ETFs in Hong Kong, even though it is geographically close to mainland China.

The Republican National Committee (RNC), under the leadership of former US President Donald Trump, recently drafted a policy platform on July 8. The platform advocates for defending the right to mine Bitcoin and ensuring every American can self-custody their digital assets and transact without government surveillance or control. It criticizes Democrats for what it calls an unlawful crackdown on cryptocurrencies.

Crypto researcher Will Clemente of Reflexivity Research suggested that Bitcoin's gains over the weekend signal a higher probability of Trump winning the next US presidential election in November. Analysts note that Bitcoin's bullish momentum coincided with Trump's Pennsylvania rally and his survival of an assassination attempt. This suggests anticipation of more favorable regulations compared to the current Biden administration.

To gauge whether crypto traders are gaining confidence in Bitcoin maintaining $63,000 as a support level, the perpetual futures funding rate is crucial. This rate, updated every 8 hours, reflects the demand for leverage among long and short positions. Even with balanced positions, the current funding rate is neutral at 0.005% per 8 hours (0.10% per 7 days), indicating minimal cost for leverage and contrasting sharply with the 1.5% levels observed in bullish markets. Further analysis of Bitcoin's monthly futures can offer additional insights into market sentiment. 

Potential Surprise Rally Amidst Investor Apathy

Professional traders often gravitate towards monthly contracts because they lack a funding rate. In neutral markets, these contracts typically trade at a 5% to 10% premium to reflect their longer settlement period. Recent data shows that the BTC futures premium rose to 11% on July 15, exceeding the neutral range of 10% for the first time in nearly two weeks. This level indicates moderate optimism, which is noteworthy given that Bitcoin remains 14% below its all-time high of $73,757 in March. When investors doubt the $65,000 level will be reached again, it heightens the potential for a surprise effect. This often triggers forced liquidation of short positions, which can drive further price increases.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.