As Bitcoin (BTC) is rapidly approaching its third planned halving, Various indicators now point to positive market sentiment when we step into this highly anticipated event.
The perpetual financing rate is becoming positive, which indicates positive market sentiment
The perpetual financing rate serves as a useful indicator for measuring general market sentiment.. If the rate is positive, long positions regularly pay short positions and vice versa. The financing rates tend to correlate with market sentiment. If the market is heavily bullish or bearish, funding rates tend to be positive or negative.
The perpetual financing rate became extremely negative during the collapse of the Black Thursday market and rose again to an almost positive area after the market collapsed, but had trouble getting out of the positive side. The funding rate broke up weakly in the first week of May as the Bitcoin network approaches the third cut in half.
Buy-sell relationship as a counter indicator
Traders are constantly buying put options, as the increase in the put-call rate since the market crash in mid-March shows and reaches a three-month high. In general A growing put-call relationship indicates a decline in sentiment on the options market. However, I have the same perspective as Matt D’Souza, a hedge fund manager at the Blockchain Opportunity Fund A steadily increasing put-call rate could be interpreted as a bullish indicatorThis is the opposite view that traders are optimistic about Bitcoin’s price and hold Bitcoin and buy put options like hedges and insurance instead of speculation. As D’Souza said:
“A growing put call means that many investors are buying downside protection. I love it as an opposite indicator. If put / call becomes extreme or higher than normal, I am actually optimistic because I am in an opposite position. I like to do the opposite of the herd. This is the most important thing if the proportions go too far in both directions. “
Bitcoin option flows can also confirm the belief that traders buy options to hedge themselves as there are more put buyers than volume put sellers. If there is significant volume on the sales side, this reflects the concerns of market participants about a possible market slowdown.
The profit rate for output has become positive
The Spent Output Profit Ratio (SOPR) was broken and stayed above 1 as the market recovered from the slump on Black Thursday.
SOPR values above 1 were rejected in March and April, indicating a micro bear market. However, as the market approaches Bitcoin’s halving in May, we saw the SOPRs break through 1 and fall below 1 for the last week of April.
People generally feel much more comfortable selling when they make a profit. If market sentiment develops positively, people hesitate to sell at a loss, so a SOPR below 1 is rejected.
As the world is fighting the COVID-19 pandemic, this global situation is also worth considering. We believe that there is still considerable market uncertainty ahead, particularly with the halving approach that has contributed to this uncertainty.
Market data indicate a positive but relatively weak sentiment, which may indicate that the market is cautiously optimistic about the current market structure.
The views, thoughts and opinions expressed here are only those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.