According to Bloomberg, Bitcoin traders seem to have reduced their bets on the world's largest cryptocurrency as its two major driving forces diminish. On April 19, the Bitcoin funding rate, which is the premium paid by traders to open new long positions in the token's perpetual futures market, turned negative for the first time since October 2023. This metric indicates a decrease in Bitcoin demand following a period where a series of US spot-Bitcoin ETFs pushed the token to record highs.
However, net inflows to these ETFs have decreased in recent weeks. The much-anticipated halving, a quadrennial event that cuts the rewards earned by miners that secure the blockchain and reduces the supply of new coins in the market, had a minimal effect on Bitcoin's price last week. Bitcoin reached a peak of $73,798 in March but has since corrected nearly 13%, trading at $64,214 as of 08:35 a.m. on Thursday in London.
The enthusiasm of buyers for the original cryptocurrency has cooled partly due to increasing risk aversion linked to tensions in the Middle East, as well as expected delays to Federal Reserve rate cuts. Bitcoin funding rates reached a three-year high in March, indicating an overheated market, but were below zero as of Tuesday. Julio Moreno, CryptoQuant’s Head of Research, stated that this certainly means that the desire for traders to open long positions has eased.
Vetle Lunde, an analyst at K33 Research, noted that the current 11-day neutral-to-below-neutral funding rate streak is unusual, with past dips promptly followed by a flurry of leveraged bets. He added that the lengthy nature of this perp discount could point toward further price consolidation. The drop-off in the funding rate coincides with a decline in daily inflows into the US spot-Bitcoin ETFs. So far this month, the group of 11 products has seen a net inflow of $170 million, significantly less than the $4 billion they garnered in the same number of trading days in March, according to data compiled by Bloomberg.
