Negative Nirvana? Decoding The First Bitcoin Funding Rate Dip Of 2024

Christian Encila

1 year ago

3 mins read

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The recent Bitcoin halving event, which cut the block reward for miners in half on April 20, 2024, has sparked a wave of optimism in the cryptocurrency market. While a brief dip in a key futures metric hinted at potential short-term bearishness, overall market indicators suggest a bullish trend taking hold.

Analysts at Kaiko, a market data provider specializing in crypto derivatives and futures, reported a shift in Bitcoin’s funding rate leading up to the halving. The funding rate is a fee paid between long and short position holders in futures contracts.

A negative rate signifies that short positions are compensating long positions, potentially indicating a bearish outlook. Notably, Bitcoin’s funding rate dipped into negative territory for the first time this year on April 18th, just two days before the halving.

Bitcoin Bounces Back With Renewed Bullishness

However, this short-lived bearishness seems to have been overshadowed by a broader sense of optimism. Following the halving, Bitcoin’s funding rate swiftly recovered and currently sits at a positive 0.0051. This suggests a return to the status quo where long positions are incentivized, reflecting a more bullish market sentiment.

Funding rates for $BTC perps turned negative for the first time since late 2023 in the lead up to the halving. pic.twitter.com/MjiU4C1L5m

— Kaiko (@KaikoData) April 24, 2024

Further bolstering this positive outlook is the uptick in Bitcoin’s Open Interest (OI), a metric that represents the total amount of outstanding futures contracts. Despite a dip last week, OI has since rebounded to over $17 billion, indicating continued investor engagement in the Bitcoin market.

Bitcoin is now trading at 64.250. Chart: TradingView

Halving Impact Exceeds Historical Trends

Perhaps the most intriguing finding from Kaiko’s analysis is the suggestion that this halving event might be having a more positive impact on Bitcoin’s price compared to previous halvings.

At the time of the report, Bitcoin was up 2.8% since the halving, exceeding the price increases observed immediately after the 2012, 2016, and 2020 halving events. Despite a slight price correction in the following days, Bitcoin remains nearly 3% up since the halving.

However, analysts caution against drawing definitive conclusions from this initial data. The cryptocurrency market is inherently volatile, and short-term fluctuations are to be expected.

Some experts point to historical trends where price increases following a halving event were often followed by periods of consolidation or correction. The true impact of the halving on Bitcoin’s long-term price trajectory might not be fully evident for several months.

Bullish Sentiment Fueled By Macroeconomic Factors

Beyond technical indicators, some analysts believe that broader macroeconomic factors are also contributing to the current bullish sentiment surrounding Bitcoin.

The ongoing global inflationary pressures and geopolitical uncertainties have driven investors towards assets perceived as hedges against inflation. Bitcoin, with its finite supply due to the halving mechanism, fits this profile for some investors.

Additionally, the increasing institutional adoption of cryptocurrency is seen as a positive sign for Bitcoin’s long-term prospects. Major financial institutions are actively exploring ways to offer Bitcoin exposure to their clients, suggesting a growing level of confidence in the asset class.

Featured image from Pexels, chart from TradingView

Christian Encila

They say journalists never truly clock out. But for Christian, that's not just a metaphor, it's a lifestyle. By day, he navigates the ever-shifting tides of the cryptocurrency market, wielding words like a seasoned editor and crafting articles that decipher the jargon for the masses. When the PC goes on hibernate mode, however, his pursuits take a more mechanical (and sometimes philosophical) turn.

Christian's journey with the written word began long before the age of Bitcoin. In the hallowed halls of academia, he honed his craft as a feature writer for his college paper. This early love for storytelling paved the way for a successful stint as an editor at a data engineering firm, where his first-month essay win funded a months-long supply of doggie and kitty treats – a testament to his dedication to his furry companions (more on that later).

Christian then roamed the world of journalism, working at newspapers in Canada and even South Korea. He finally settled down at a local news giant in his hometown in the Philippines for a decade, becoming a total news junkie. But then, something new caught his eye: cryptocurrency. It was like a treasure hunt mixed with storytelling - right up his alley!

So, he landed a killer gig at NewsBTC, where he's one of the go-to guys for all things crypto. He breaks down this confusing stuff into bite-sized pieces, making it easy for anyone to understand (he salutes his management team for teaching him this skill).

Think Christian's all work and no play? Not a chance! When he's not at his computer, you'll find him indulging his passion for motorbikes. A true gearhead, Christian loves tinkering with his bike and savoring the joy of the open road on his 320-cc Yamaha R3. Once a speed demon who hit 120mph (a feat he vowed never to repeat), he now prefers leisurely rides along the coast, enjoying the wind in his thinning hair.

Speaking of chill, Christian's got a crew of furry friends waiting for him at home. Two cats and a dog. He swears cats are way smarter than dogs (sorry, Grizzly), but he adores them all anyway. Apparently, watching his pets just chillin’ helps him analyze and write meticulously formatted articles even better.

Here's the thing about this guy: He works a lot, but he keeps himself fueled by enough coffee to make it through the day - and some seriously delicious (Filipino) food. He says a delectable meal is the secret ingredient to a killer article. And after a long day of crypto crusading, he unwinds with some rum (mixed with milk) while watching slapstick movies.

Looking ahead, Christian sees a bright future with NewsBTC. He says he sees himself privileged to be part of an awesome organization, sharing his expertise and passion with a community he values, and fellow editors - and bosses - he deeply respects.

So, the next time you tread into the world of cryptocurrency, remember the man behind the words – the crypto crusader, the grease monkey, and the feline philosopher, all rolled into one.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.