The notorious fluctuating volatility of the cryptocurrency market continues to see mixed fortunes on a monthly basis. From traders selling their tokens at a loss to betting against the market (hoping for a hike) – the market has seen it all. But what happens this time?
Hold on
Bitcoin has been falling since it hit its all-time high of $ 69,000 in November 2021. Altcoins have also seen the wrath of the general market downturn.
In fact, Ethereum fell 11.45% while Bitcoin fell 9.29%. Similarly, the liquidation of cryptocurrencies hit 673 million just two days ago. But here’s something to expect according to Santiment, the analytic platform.
After the market recovery, cryptocurrency exchanges saw high levels from short trade is on its way, as people fear it will drop back to June levels.
Traders bet against the market as the price showed some vital signs of life. Reading the average funding rate supported this narrative.
The negative financing rate indicated that perpetual prices fell below the marked price.
Source: Santimento
This rapid shift in funding rates indicated a shift in sentiment from greed to fear. Hence, signaling a potential sign of a low.
Ergo, taking advantage of this “bearish” mentality, the bet against the tide of the market made sense for traders. Sanctification further added, “as long as they bet against the markets, there is a greater chance of an upside.”
Not a bad omen, after all
Ki-Young Ju, CEO of the on-chain analytics resource CryptoQuant, also showed how historically a low funding rate “could be a buy signal.” He considers his tweet from last year, which tells the same result.
In this spot-oriented and bullish-only market, a low funding rate could be a buy signal.
It doesn’t seem like a good idea to wait for a correction when institutions buy $ BTC.
Chart ? https://t.co/yzjLW3MUFD pic.twitter.com/IwolH6kz0c
– Ki Young Ju (@ki_young_ju) January 3, 2021
It goes without saying that going against the crowd in a bullish environment could help buy cryptocurrencies at a discounted price.
Furthermore, the Net Unrealized Profit and Loss (NUPL) indicator rose and turned positive.
Overall, referring to the weighted average funding rate, it can be said that short-term holders have congested the network and a rebound may be at stake.
In fact, as of press time, both BTC and ETH showed a small rise on CoinMarketCap, but the rise wasn’t significant enough to help cryptocurrencies break through short-term resistance levels.