Key Points
- Bitcoin’s Average Funding Rate across top exchanges has dropped to zero, historically indicating a potential bull rally.
- Bitcoin is holding steady above $90K, suggesting a possible breakout.
Bitcoin’s Average Funding Rate on major exchanges has recently fallen to zero. This development has historically been an indicator of an impending macro bull rally.
It is currently unclear how long the funding rate will remain at these levels. However, previous cycles suggest that such instances often lead to significant price surges.
Understanding the Zero Funding Rate
The Funding Rate in Bitcoin futures is a crucial indicator of market sentiment. A negative rate suggests that short traders are paying long traders, indicating a dominant bearish sentiment. On the other hand, a highly positive Funding Rate shows an excessive bullish leverage in the market.
When the Funding Rate drops to zero, it typically indicates a balanced market with neutral sentiment. Nevertheless, historical data shows that this equilibrium often precedes strong upward movements. Similar dips in the Funding Rate during previous cycles have led to aggressive price rises.
One of the key factors supporting the bullish case is Bitcoin’s resilience above the $90K mark. Despite temporary retractions, the cryptocurrency has consistently bounced back from this level, indicating strong buying interest.
Bitcoin’s Price and Market Indicators
An examination of Bitcoin’s price chart reveals a crucial technical setup. The 50-day Moving Average (MA) is currently at approximately $98,709.64, whereas the 200-day MA is around $79,118.31. Bitcoin is testing the short-term MA, and staying above this level could further strengthen the bullish resilience.
The Relative Strength Index (RSI) is at 46.22, suggesting that Bitcoin is neither overbought nor oversold. This indicates potential for an upward movement, provided the buying pressure remains stable. The volume activity also suggests that bulls are accumulating near the current range, further bolstering the $90,000 support zone.
The BTC Futures Perpetual Funding Rate [7D-SMA] chart adds another layer of insight. If the trend repeats, Bitcoin could be preparing for another breakout. Meanwhile, the all-exchanges Funding Rate chart shows a brief dip below zero, meaning short positions were paying longs.
Typically, this indicates traders expect a price drop or stagnation. However, in the past, similar dips have acted as catalysts for upward momentum. If Funding Rates stay neutral or negative for a longer period, Bitcoin may experience lower volatility before making a decisive move.
If the Funding Rate stays near zero or turns slightly positive, it could set the stage for a continuation of Bitcoin’s macro uptrend. Conversely, a prolonged negative Funding Rate could lead to volatility, potentially causing liquidations in the derivatives market.
As the market consolidates, a decisive break above the $98K-$100K resistance could trigger the next phase of the rally, pushing Bitcoin towards new all-time highs. Whether history will repeat itself with another bull run remains to be seen, but the current setup favors a potential breakout.
