Bitcoin’s negative funding rate signals bearish sentiment, but options markets remain stable, indicating traders may not be entirely convinced of a downward trend.
Bitcoin's recent price correction and negative funding rate have raised concerns that bears may be gaining control. While Bitcoin dropped to $56,500 after U.S. inflation data was released, the options market suggests that traders are not fully convinced of a bearish trend. The question remains: Is Bitcoin’s path to $60,000 now blocked, or are bulls still holding ground?
Key Points:
Bitcoin's Correlation with Stock Markets: Bitcoin closely tracked U.S. stock market movements after inflation data was released, reflecting macroeconomic uncertainty. The S&P 500 saw a 1.6% decline, influencing Bitcoin's 2.2% drop.
Negative Funding Rate Concerns: The perpetual futures funding rate has been negative since Sept. 7, indicating low demand for leveraged long positions. However, bearish confidence remains weak, with monthly funding rates staying below 0.6%.
Options Market Stability: Despite the negative funding rate, Bitcoin’s 25% delta skew in options markets remains neutral, signaling that traders have not fully turned bearish, with only a slight premium for put options.
Long-Term Bullish Sentiment: While the short-term outlook remains uncertain, persistent inflation and rising government debt could benefit Bitcoin’s price over the long term, despite regulatory concerns and ETF outflows.
Bitcoin’s negative funding rate indicates a lack of bullish confidence, but options markets suggest the bearish sentiment is not overwhelming. The next major price move may depend on the broader stock market’s reaction and how Bitcoin handles the resistance at $58,000.
Source: Cointelegraph
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