These two on-chain and technical indicators point to a new BTC drop
07:00, 27 July 2022
The digital assets market saw a relief rally last week after bitcoin (BTC) climbed to a five-week high on 20 July, bringing the longest streak of ‘extreme fear’ in the cryptocurrency market in history to an end.
But some signs - both on-chain and on price charts - are suggesting the rally may have been short-lived. BTC and the rest of the tokens have aready dipped ahead of today's Federal Reserve Open Market Committee meeting, as fears mount over the Fed's aggressive interest rate hiking.
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Rising funding rates ‘indicate a new decline for BTC’
Traders betting on BTC’s price going up are currently paying a premium for their positions to short-betters. But that is exactly when the price of bitcoin tends to drop, on-chain analyst writing under the pseudonym Kriptolik, pointed out in a post on CryptoQuant.
Using CryptoQuant's data, Kriptolik wrote that the BTC funding rate “has risen a lot and this indicates a new decline”.
The funding rate is a periodic fee that futures traders pay to each other. When the funding rate is positive, it means that long traders are paying short traders and vice-versa.
Looking at the last funding rate, it seems that it has risen a lot and this indicates a new decline.
— CryptoQuant.com (@cryptoquant_com) July 23, 2022
by @theKriptolik
Check????https://t.co/Sxghqll6Od
“The short-term BTC price trend reverses when funding rates hit lows or highs. In other words, if the funding rate is too high, the BTC price decreases, and if the funding rate is too low, the upward trend in the BTC price begins.”
“Looking at the last funding rate, it seems that it has risen a lot and this indicates a new decline.”
BTC price below 200-week moving average
BTC climbed as high as $24,196 during the peak of its rally last week, breaking through its its 200-week moving average at $22,705. But the main virtual currency failed to sustain that level for long and ultimately closed the week below it.
And surely enough, BTC then continued to move downwards from there: “This BTC pullback is the technical aftermath of rejecting from the 200-week MA after a weekly close below it,” crypto analyst and author of the Rekt Capital newsletter wrote in a tweet on Tuesday.
This #BTC pullback is the technical aftermath of rejecting from the 200-week MA after a Weekly Close below it$BTC #Crypto #Bitcoin pic.twitter.com/SRl2Qlcdp3
— Rekt Capital (@rektcapital) July 26, 2022
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