BlocksInform
Bitcoin () is currently priced significantly lower than it was in late 2021. However, market sentiment is as positive as it was at the time.
That's the message from funding rates, a mechanism that keeps the prices of bitcoin perpetual futures contracts in sync with the spot market price. When perpetual futures are traded above the current level, the funding rate is positive and bullish long or long holders pay bearish short positions to maintain their open position. The reverse occurs when perpetual securities are traded under the spot price.
Analysts follow the funding rate to gauge the sentiment of leverage traders. The higher the financing rate, the more enthusiastic traders are about the price outlook and the more willing they are to pay a bonus to keep their bets up open.
From Tuesday onwards, bitcoin annualized perpetual funding rate among the main exchanges, including BINANCE was 8.491%, Highest level since December 3, 2021, based on data monitored by the blockchain analysis company glassnode.
At that time, a bitcoin was priced at about $57,000, or 2.5 times the current $23,400 market rate. Cryptocurrency reached an all-time high of $69,000 in November 2021.
The rate of financing became positive in the middle of December last year, indicating the exhaustion of sellers. Cryptocurrency picked up a strong offer around the turn of the year and has rebounded more than 40% since then.
"There has been a clear shift in market sentiment post-[December) CPI with funding rates well into positive territory and price volatility on the rise," Dessislava Laneva, a research analyst at Paris-based crypto data provider Kaiko, said in a tweet referring to the U.S. consumer price index.
The CPI dropped to 6.5 per cent in December, the sixth consecutive monthly slowdown in price increases. The data convinced the markets that the Fed was likely to turn to interest rate cuts that will boost liquidity later this year.
Early this week, Fed Chair Jerome Powell acknowledged the inflation picture and downplayed concerns of a severe tightening-induced economic slowdown, bolstering the pivot hopes.
Look at non-agricultural employment in the United States.
The U.S. nonfarm payrolls (NFP) report scheduled for release at 13:30 UTC is likely to show the world's biggest economy added 185,000 jobs in January following December's 223,000 increase, according to Reuters estimates sourced from FXStreet.
The unemployment rate should be slightly above 3.6 per cent in January, while the average earnings per hour, or the increase in salaries, should be 4.9% year-over-year after the 4.6% increase in December.
Significantly higher average hourly earnings, an approximation of possible inflation, When combined with aggregate employment, investors may reconsider the potential for the Fed to maintain higher long-term interest rates and reduce upside risk asset positioning, including cryptocurrencies.
