Bitcoin’s price has reached a new ATH after a long period of consolidation. At the time of writing, BTC is trading at $63.235 with 5.1% profits in the past day and 7.7% in the 7-day chart.
Before the rally, data from Santiment pointed to high levels of bearish sentiment across social media platforms. During the bullish price action, there was an ATH in address activity with 1.36 million when BTC touch $63.4000.
Now, the Fear & Greed Index is near the Extreme Greed levels. On the derivatives market, investors pushed the funding rate across all exchanges towards 0.08%, as shown by Glassnode data. A “tolerable” level, according to Lex Moskovski.
#Bitcoin hit ATH and the funding is tolerable.
Good sign. pic.twitter.com/gfzsDFV42M
— Lex Moskovski (@mskvsk) April 13, 2021
However, this metric can increase over the next hours. Over the weekend, when BTC was gaining momentum and tried to break the $61.000 resistance, the funding rate skyrocketed to 0.16%. Levels not reached since mid-February this year.
Per an Arcane Research report, the spike in this metric preceded a correction in BTC’s price. Since the beginning of 2021, when the funding rates go high, BTC’s price follows as investors “heavily” positioned themselves for the upside.
If this metric stays in the current levels, the rally could be prolonged, but an increase in the funding rates could be a key indicator pointing to short-term bearish price action, a return to support, and further consolidation. Arcane Research’s report claims:
High funding rates and futures premium hint towards a lot of leverage towards the upside. Leverage is an essential ingredient in the recipe for liquidations, and we would not be surprised to see an influx in long liquidations soon.
Presently, the threat for a cascade of liquidations hurting Bitcoin’s price action is yet to materialize, but that…