Bitcoin has seen an immense downturn over the past couple of days, declining from highs of over $9,800 to lows of $8,600 yesterday. This selloff came about after multiple consecutive rejections around $10,000.
This turbulence was triggered by the recent reports of a 2009-era wallet moving 50 BTC, although there has not been any further activity in the time since this transaction occurred.
In order for this to be confirmed, it is imperative that Bitcoin reclaims $9,200, as an inability to do so could confirm that the crypto’s market structure is firmly in favor of sellers.
One factor that could suggest a rally higher is imminent is extremely negative funding seen across margin trading platforms.
Bitcoin Sees Negative Funding Spike as It Hovers at Key Support
At the time of writing, Bitcoin is trading down just under 2% at its current price of $8,820. This marks a notable decline from its daily highs of over $9,100 that were set yesterday morning.
The cryptocurrency dipped as low as $8,600 on some trading platforms yesterday evening, although this decline was quickly absorbed by aggressive buying pressure that subsequently led BTC back up to $8,800.
This support level has been important for the benchmark cryptocurrency, as it has acted as strong support on multiple occasions throughout the past several weeks.
One factor that suggests BTC will see upside in the hours and days ahead is the massive spike in negative funding that it has seen.
Negative funding signals that short positions have to pay out longs, essentially meaning that it is expensive to be in a short at the moment.
In the past, periods of extreme negative funding have been followed by sharp price rebounds.
The below chart recently offered by a popular cryptocurrency analyst shows just how negative funding currently is across the board.
BTC Could Confirm Latest Dip as a Bear Trap if It Reclaims $9,200
The analyst noted that he does believe a visit to this level is imminent, as buyers may attempt to stop shorts out by propelling the crypto up towards $9,050 or higher.
“BTC lower time frames. Watching if it can make a run to 9050-9.2k for possible shorts. Reclaim 9.2k and would have to assume this was just a huge bear trap. Something to watch over the next few 4hr closes and the daily close.”
How the crypto reacts to $8,800 could offer significant insights into its mid-term trend.
Featured image from Shutterstock.