Data shows derivatives exchange users are still shorting Bitcoin after the recovery that the cryptocurrency has enjoyed beyond the $57,000 mark.
Bitcoin Funding Rate Is Still Negative On Major Exchanges
According to data from the analytics firm Funding Rate,” which keeps track of the periodic fee that the derivatives contract traders on a given exchange are paying each other right now.
When the value of this metric is positive, it means the long contract holders are paying a premium to the short investors in order to keep their positions. Such a trend implies a bullish sentiment is shared by the majority.
On the other hand, the indicator being negative suggests the shorts are outweighing the longs, so a bearish mentality can be assumed to be the dominant one in the sector.
Now, here is a chart that shows the trend in the Bitcoin Funding Rate for two platforms, Binance and BitMEX, over the past month:
As is visible in the above graph, the Bitcoin Funding Rate on both of these platforms had achieved large negative levels around the price bottom a few days back.
This means that derivatives users had been expecting the decline of the cryptocurrency to continue further. The bet of these Binance and BitMEX traders clearly didn’t work out, though, as the coin has been going up since then. In fact, the liquidation of these investors is likely what has facilitated the rebound from the bottom.
Bitcoin has continued this surge during the past 24 hours, breaking past the $57,000 level. According to data from CoinGlass, this BTC surge and the uplift across the rest of the sector have caused almost $123 million in liquidations.
Out of these, over $88 million of the liquidations have involved the short investors, with Bitcoin shorts alone making up for around $34 million of the flush. As displayed in the Funding Rate chart, though, the metric has still continued to be negative on these platforms, suggesting that bearish speculators haven’t let up even after this heavy beating.
But as it has already happened in this surge so far, these positions could end up finding liquidation, thus fueling the price surge even further. It now remains to be seen if Bitcoin will continue to go contrary to this expectation held by the majority of the derivatives investors or not.
BTC Price
At the time of writing, Bitcoin is trading at around $57,000, up more than 3% over the last 24 hours.
