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BTC price preserves $16.5K, but funding rates raise risk of new Bitcoin lows

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BTC price preserves $16.5K, but funding rates raise risk of new Bitcoin lows

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BTC Price Preserves $16.5K, but Funding Rates Raise Risk of New Bitcoin Lows

BTC Remains Relatively Stable

Bitcoin has been holding at a relatively stable 17k since the start of the month. This is despite the overall market volatility seen throughout December, largely thanks to the uncertainty surrounding a new US president. However, there may be cause for concerns if funding rates continue to increase.

Funding Rates Short Term Concern

Funding rates are a short-term metric that gauges whether the Bitcoin market is bullish or bearish. It looks at leverage in the cryptocurrency market and measures whether buyers or sellers have the upper hand.

Increased rates suggest bearishness

Increasing funding rates suggest that sellers are in control and that the market could be ready for a correction. This means that even though prices are steady at the moment, they could soon decrease.

What would a correction look like?

If the market is bearish and a correction takes place, there is a chance that the price of Bitcoin will decrease again. It may not be as low as it was in early December when it dropped below 16.5k but it could be close.

No guarantee

It is important to remember that there is no guarantee that the BTC market will turn bearish, and that current funding rates don’t necessarily mean that a price drop is inevitable. The market is volatile and can change in an instant so it’s best to be cautious.


BTC is currently holding steady at 17k, but increased funding rates could indicate that a price drop is possible. Investors should keep an eye on the market and not be afraid to protect their portfolios if necessary. Always take caution when investing and never put in more than you can afford to lose.

The Bitcoin (BTC) price continues to hold close to $16,500 as of press time on Sunday, Nov. 8, but an increasing funding rate could lower the market”s chances of avoiding a further decline.

The leading cryptocurrency by market capitalization had been trading around fresh three year highs at $16,541 earlier today, however, BTC has since pulled back somewhat, to around $16,449 at press time.

The perpetual futures funding rate — which measures the interest traders pay to go long or short — has been growing steadily over the past few days, notably towards the end of last week, according to data from tradingview.com.

In the past, an increasing funding rate has been associated with significant price drops.

As Bloomberg analyst Mike McGlone has previously said: “[A] sustained funding rate above 0.05% resembles topping price-action before Bitcoin starts to decline.”

At press time, the BTC funding rate is at 0.094%, up from just 0.04% at the beginning of Friday, November 6.

As such, an increasing funding rate could mean the market is at risk of a new low — and further pullback — over the days ahead.

“The BTC price continues to consolidate near its all-time highs, however, a steady increase in the futures funding rate implies Bitcoin could be at a tipping point,” said Fundstrat Global Advisor Robert Sluymer.

“The implied risk of Bitcoin sliding to its recent low $14,400 is increasing,” he added.

Nevertheless, other observers remain optimistic about the chance of BTC breaking above its all-time high at $20,000.

“My belief is that much of the risk from the current level is successfully priced-in, and I would not be terribly surprised to see Bitcoin testing the all-time highs in the coming weeks,” said CoinShares strategy director Meltem Demirors.

With that in mind, a stable BTC price at the current levels — and a decrease in the futures funding rate — would mean Bitcoin is no longer at risk of setting a fresh low.

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