Here’s Why Bitcoin May Soon See a Sharp “Downside Flush” Despite Stability - OhNo "WTF" Crypto

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Here’s Why Bitcoin May Soon See a Sharp “Downside Flush” Despite Stability

#OhNoCrypto
  • Bitcoin has found some strong stability within the lower-$12,000 region following yesterday’s upswing
  • Analysts are widely confident that it is currently caught within the early stages of its next bull run, which may ultimately lead it up towards its all-time highs
  • Despite getting closer to these highs each week, there may still be some turbulence ahead for the cryptocurrency
  • One analyst is noting that high funding rates for BTC on margin trading platform spell trouble for its near-term outlook
  • He believes that BTC will soon see a sharp downswing that corrects this funding and brings it back to normal

Bitcoin and the aggregated cryptocurrency market have been seeing some strong price action in recent weeks, with BTC pushing to fresh yearly highs yesterday while many altcoins extend their parabolic momentum.

Analysts are now widely noting that they expect the cryptocurrency’s strong uptrend to persist in the mid-term, with its underlying strength likely translating into further gains.

One trader, however, expects it to see some short-term turbulence due to high funding rates across trading platforms.

He believes this indicates that bulls have become over-zealous and that a sharp downside movement is imminent.

Bitcoin Stabilizes Within Lower-$12,000 Region Following Yesterday’s Upswing

At the time of writing, Bitcoin is trading down marginally at its current price of $12,260. This is around the price at which it has been trading throughout the past several days.

Yesterday, the cryptocurrency was able to rally as high as $12,400 before it began running into heavy resistance. From this point on, it was able to maintain its strength, only ceding a small portion of its gains.

As it consolidates, the focus is once again being placed on altcoins – as many of them are continuing to add to their already impressive rallies.

BTC Funding Rates Point to Imminent Downside 

One factor that may hamper Bitcoin’s short-term strength is the exorbitantly high funding rates seen on margin trading platforms.

High funding means that it is expensive for bulls to gain upside exposure to BTC, paying a high-interest rate every 8 hours to be in a long position.

One analyst is pointing to the current rates as evidence that a downside movement is imminent.

“Usually when we see sustained off-balance BTC perps funding, it results in a correction to the other side. Doesn’t mean this will happen every time, but it’s something to consider. A quick downside flush likely corrects this back to flat.”

Bitcoin

Image Courtesy of Jonny Moe.

It is important to note that funding-related dips are typically short-lived.

Featured image from Unsplash.
Pricing data from TradingView.


OhNoCryptocurrency via https://www.ohnocrypto.com/ @Cole Petersen, @Khareem Sudlow