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HomeBitcoinAnalysis of Funding Rates in Cryptocurrency Markets by Daan Crypto Trades

Analysis of Funding Rates in Cryptocurrency Markets by Daan Crypto Trades

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  • The funding rates for Bitcoin have been stable but are beginning to show signs of increasing, which may be in response to upcoming significant events.
  • There is a noted entry of long positions in the market, suggesting traders are anticipating a rise in Bitcoin prices, possibly influenced by political developments.

In a recent tweet, Daan Crypto Trades (@DaanCrypto), discussed the funding rates in the cryptocurrency market, particularly focusing on Bitcoin. The tweet, posted on January 20, 2025, at 14:21 UTC, provides insights into the current and upcoming trends in the funding rates amidst market activities.

Slight Increase in Funding Rates

Daan notes that the funding rates have been relatively stable. In cryptocurrency markets, funding rates refer to the periodic payments exchanged between holders of long (buyers) and short (sellers) positions in perpetual futures contracts. A stable funding rate indicates a balanced market where there is no significant buying or selling pressure.

The chart points out a warming up of funding rates, suggesting a slight increase. This rise could be associated with reactions to significant events, possibly the inauguration of Donald Trump in 2025. An increase in funding rates typically reflects a rise in demand for long positions, indicating a more bullish market sentiment.

Entry of Long Positions

Daan mentions that “some long positions are entering today” indicating that more traders are betting on an increase in Bitcoin prices. This trend may be driven by positive price movement expectations linked to political events.

It is mentioned that when Bitcoin undergoes a price discovery phase, where the market seeks to establish a new price range due to changes in supply and demand, funding rates can remain elevated for weeks. This condition is attributed to high volatility and speculative interest that often accompanies such periods.

Recommendation on Funding Rate Focus

Daan advises traders not to obsess over funding rates during periods of high volatility and price discovery. He suggests that funding rates can remain overheated for extended periods, which could adversely affect trading decisions if too much emphasis is placed on them.

BTCUSDT_2025-01-20_11-23-57
Source: Tradingview

Bitcoin (BTC) is currently priced at $107,524.79 USD, reflecting a 2.93% increase in the last 24 hours. Its trading volume is a staggering $113.71 billion, indicating significant market activity, while the market capitalization stands at $2.13 trillion USD.

With 19.81 million BTC in circulation out of a maximum supply of 21 million, Bitcoin’s scarcity continues to support its valuation​.

Technical Analysis

  • Support and Resistance: Key support is observed near $105,000, with resistance levels at $110,000 and $115,000.
  • Trading Volume: The trading volume surge (up by 92.92%) suggests strong investor interest, potentially driven by macroeconomic factors or institutional activity.
  • Trend Indicators: Bitcoin remains in a bullish trend supported by its position above the 200-day EMA, signaling long-term positive sentiment.
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Isai Alexei
Isai Alexei
As a content creator, Isai Alexei holds a degree in Marketing, providing a solid foundation for the exploration of technology and finance. Isai's journey into the crypto space began during academic years, where the transformative potential of blockchain technology was initially grasped. Intrigued, Isai delved deeper, ultimately making the inaugural cryptocurrency investment in Bitcoin. Witnessing the evolution of the crypto landscape has been both exciting and educational. Ethereum, with its smart contract capabilities, stands out as Isai's favorite, reflecting a genuine enthusiasm for cutting-edge web3 technologies. Business Email: [email protected] Phone: +49 160 92211628
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