By Peter Bergman (MoneyAmped.com)
A prominent cryptocurrency analytics company has issued a cautionary statement indicating that a critical metric exhibits a bearish trend for Bitcoin (BTC), the foremost cryptocurrency by market capitalization.
Will the Market Drop Soon?
According to Santiment, the funding rate of Bitcoin could soon exhibit a negative trend, thereby signaling a potential decline in the market.
Investors in the cryptocurrency have the option to engage in leveraged long or short positions within futures contracts with a perpetual duration. The sustenance of market funding necessitates periodic payments contingent upon the variance between the endless contract market and the spot price, commonly referred to as the funding rate.
According to Santiment,
It is possible to focus specifically on the funding rate of Bitcoin on Binance, which is the primary platform for perpetual contract rates. Currently, traders are exhibiting a sustained level of interest comparable to that observed over the preceding month. Considering the historical trend of prices moving inversely to funding rates, the time elapsed is a cause for concern.
Traders’ Skepticism Is Growing
Santiment also monitors the trends on social media, which can offer traders valuable data used in their attempts to forecast the price movement of Bitcoin.
“First and foremost, we’ve been looking at social data and noticed a trend that you crypto bulls will find interesting. During the previous month and a half, investors have steadily developed a pessimistic attitude toward the most valuable assets in the cryptocurrency market. After looking at data from several years in the past, we concluded that prices have traditionally moved in the opposite direction of what most people expected. Increased skepticism on the part of market participants is correlated with an increased likelihood of sustained price increases.
Bitcoin Is Less Often Discussed on Social Networks
Nevertheless, according to Santiment, the number of talks on various social media platforms generally decreases.
“Right now, we can observe that the number of bullish AND bearish candles generated by the crowd is declining.” Compared to the beginning of the year, far fewer people are taking part in the conversation on social media platforms like Twitter, Discord, Telegram, and Reddit. This drop in attendance indicates that people are perplexed about what to believe. In most cases, the presence of some doubt may be inferred from a decrease in the level of attention shown by the audience despite increased prices being charged.
At the time of composition, Bitcoin is being traded at a value of $28,293, indicating a decrease of 2.9% within the last 24 hours.
