Despite the price pullback, the percentage of Bitcoin bulls is still rising—what else to pay attention to
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Despite the significant drop in Bitcoin (BTC) prices, long positions have increased, indicating that traders are caught in a bull trap. In fact, when BTC prices fell to around $92,000, the ratio of long positions on Binance and OKX rose significantly.
This trend suggests an upcoming turning point, where excessive bullish sentiment may reverse as shorts enter and longs exit, potentially triggering a price recovery.
These cycles often precede major market reversals. If the long ratio peaks and begins to decline, the downturn could bring a certain rebound for BTC.
This may indicate a shift in market sentiment, potentially triggering shorts in the process. It is worth noting that, in addition to the increase in long percentage, BTC is also showing other signs of recovery on the charts.
Funding Rate of Bitcoin
With the price increase, the overall funding rate has surged significantly—this is a strong sign of bullish sentiment. Subsequently, the funding rate remains high while Bitcoin prices begin to fall—indicating market overextension.
Traders may establish long positions during the interest rate hikes, but the market cannot sustain higher buying pressure, leading to a pullback.
The pullback may stimulate profit-taking or incite shorts to take advantage of high funding rates, resulting in selling pressure.
Nevertheless, the sustained positive funding rate suggests potential market confidence, although caution may be necessary. If the funding rate holds or reverses, it may indicate potential market trends. Stability or reversal of the funding rate could determine Bitcoin's short-term trajectory.
Demand Encountering Obstacles
Bitcoin experienced a significant surge, rising from $40,000 to $74,000 by the end of the first quarter of 2024.
This surge was driven by increased demand, as indicated by the significant decline in over-the-counter (OTC) inventory. During this period, the OTC reported its largest monthly inventory drop of the year, down by 26,000 BTC—an indication of tightening supply.
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