Following bearish pressure over the past week, Bitcoin price has finally broken out of its consolidation range. BTC price surpassed the $63,000 mark and triggered a wave of short liquidations. In recent weeks, Bitcoin has seen volatility following the highly anticipated halving event, with prices fluctuating unpredictably. Despite this sideways movement, analysts remain optimistic about Bitcoin price action as on-chain trends turn bullish.
Bitcoin Funding Rate Turns Bullish
According to Santiment, Bitcoin funding rate is increasing on major exchanges like DyDx and Deribit. The funding rate reflects the cost of holding long or short positions in perpetual futures contracts, which can indicate market sentiment.
A rise in the funding rate suggests that there are more long positions than short positions, implying bullish sentiment among traders. However, if the rate becomes too high, it may indicate that the market is becoming too bullish, which may lead to a correction.
After last week's high of $64,000 and a sharp rejection, many investors are wary of the possibility of history repeating itself this week. During previous market peaks, high financing rates often led to significant price declines. This is why those who are bullish on Bitcoin want FOMO to stay low this time and for the rate of new short positions to follow or exceed that of long positions.
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For a healthy BTC market, it is crucial that short positions open at the same or even higher rate than long positions. This balance can prevent excessive leverage and reduce the risk of a sharp downturn. According to Coinglass data, the current BTC funding rate is 0.0041% after falling from the high of 0.0095%.
All eyes are on American macroeconomic developments this week as numerous data releases are expected. The highlight is the CPI, crucial to the inflation debate and hopes of lower interest rates for risky assets. A bullish report could confirm a buying trend in BTC price this week.
What’s next for BTC price?
The bulls defended the $60,000 level for Bitcoin but failed to keep the price above the 200-day exponential moving average (EMA) of $63,304. This highlights a strong discord between the bulls and the bears. Currently, Bitcoin is trading at $62,745, up over 2.1% in the last 24 hours.
In recent hours, bulls have pushed the price above $63,000; however, it faced heavy selling pressure from the bears. The stable 20-day EMA and the relative strength index (RSI) in positive territory indicate mixed sentiment among sellers and buyers. If the $59,600 level fails to hold, the BTC/USDT pair could return to the May 1 intraday low of $56,500. This level should attract buyers, but if the bears prevail, the pair could fall to the 61.8% Fibonacci retracement level of $54,300.
To avoid further decline, bulls need to push and hold the price above the 200-day EMA on the 4-hour price chart. If they succeed, the pair could reach $67,800. Overcoming this barrier could trigger a rally to $73,777.