Bitcoin funding rates show demand for short BTC as $40,000 turns into resistance
Bitcoin (BTC) consolidated below $40,000 on April 23 as market expectations favored further losses.
“Extreme fear” accompanies Bitcoin’s descent to $39,200
Data from Cointelegraph Markets Pro and TradingView followed a bearish BTC/USD pair after the pair touched $39,200 at Wall Street’s open on Friday.
Bitcoin fell in line with stocks and now faced the prospect of firming resistance at the $40,000 level, with traders showing their lack of confidence in a short-term recovery.
Data from on-chain analytics site Coinglass confirmed that funding rates on derivatives exchanges were significantly negative through the weekend, suggesting that the majority of market participants expected short selling to be a profitable next trade.
For analyst Filbfilb, co-founder of trading suite Decentrader, the ratio of long to short positions was another concern.
Price at $47,000:
– LS ratio was 1:1
Price at $39.5k:
– LS ratio = 3.5
— filbfilb (@filbfilb) April 22, 2022
“Bitcoin is back at that crucial level here. Losing that -> $36,000 seems to be next,” said Cointelegraph contributor Michaël van de Poppe added in a fresh Twitter update that day.
BTC/USD is circling $39,800 at the time of writing, having so far avoided a trip to bring buying liquidity below $38,000.
Cold feet among traders, meanwhile, were reflected in sentiment gauges, with the Crypto Fear & Greed Index returning to the “extreme fear” zone on Saturday.
DXY resistance sought for BTC trend break
Despite the lack of confidence, not everyone was interested in giving up belief in Bitcoin in the short term.
Related: Nasdaq has dot-com crash ‘deja vu’, trader says as Bitcoin correlation rises
“Prepare for the next runup. Historically, this has been one of the best ranges for buying Bitcoin!” popular YouTuber Crypto Rover argued alongside a chart comparing Bitcoin’s price action to US Dollar strength.
As Cointelegraph reportedthe US dollar currency index (DXY) is currently near two-year highs, and a trend reversal has historically given Bitcoin the fuel to break long-term downtrends.
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https://cointelegraph.com/news/bitcoin-funding-rates-show-demand-to-short-btc-as-40k-becomes-resistance Bitcoin funding rates show demand for short BTC as $40,000 turns into resistance