In the past hour, Bitcoin (BTC) prices topped $ 11,000 on major exchanges including Coinbase and Binance. It does so after nearly two weeks of low volatility as the cryptocurrency market stagnated and the price of Bitcoin stayed below several resistance levels.
Daily chart of the BTC / USD pair. Source: TradingView.com
In contrast to previous rallies where Ether (ETH) led Bitcoin’s surge, only BTC has risen while other major cryptocurrencies are still in the red. Decentralized financial tokens (DeFi), which outperformed BTC in August, have underperformed in the past few days.
Negative financing rates
Bitcoin’s recent uptrend has many uneven patterns compared to previous uptrends. BTC has recovered on its own in the past three days, accompanied by negative funding rates.
Funding is a mechanism used by Bitcoin futures exchanges to ensure a balance in the market. When the majority of traders in the market are short-selling against the price of an asset, short contract holders must compensate long contract holders. The opposite of this process is true when traders are betting on an asset for a long time.
Bitcoin funding rates at Skew show funding rates remain largely negative on major exchanges, suggesting that traders continue to short BTC despite its upward movement.
The data suggests three possible trends: the short positions are tight, the spot market leads the rally, or futures have minimal impact on the price of BTC.
According to the founder of TradeLayer, Patrick DuganBitMEX has lagged behind in terms of liquidity compared to the values it saw in March. Open interest in the futures exchanges has diminished in recent weeks, suggesting that futures activity has slowed.
Several data points also point to the spot market leading the current rally. If spot market demand is behind the rally, it is considered an bullish trend.
Often times, when the futures market causes BTC to spike, the market is vulnerable to continued pressure. However, if the spot market is driving BTC higher, the chances are slim that a big long press will trigger a massive correction.
$ 11,000 is still a resistance level
Even so, It is premature to expect an extended rally of $ 11,000. Traders have pointed to the $ 11,000-11,300 area as an important area of resistance. There is a high probability that a rejection will occur and $ 10,100 and $ 10,500 will remain as key levels of support.
On September 15, Michael van de Poppe, a full-time trader on the Amsterdam Stock Exchange, said that breaking $ 10,900 would likely result in $ 11,300. He said::
“Levels to follow in #BTC. Breaking $ 10,900 -> $ 11,300 below. Lose $ 10,600 -> $ 10,300 Next. “
But, Given the recent performance, it is difficult to predict a major surge in BTC above $ 11,300. After falling sharply from $ 12,500, the $ 11,300 level solidified as the resistance level.
The Fed meeting
The Bitcoin boom also coincided with the recovery in gold and the intraday rally in the US stock market. The simultaneous uptrend occurs when the Federal Reserve holds a meeting to set interest rates.