Bitcoin (BTC) has been stuck in a narrow range since August 8, unable to break above $62,000 while consolidating support at $58,000. This consolidation reflects growing uncertainty among traders, especially as the funding rate of BTC futures remains negative, indicating low demand for leverage from buyers.
The question is whether this indicator can determine the trajectory of the crypto market on its own or whether historical patterns suggest an impending bull run.
S&P 500 and Gold Near All-Time Highs While Bitcoin Fails to Sustain Momentum
A major concern for Bitcoin investors is the positive performance of the S&P 500, which is currently just 2.5% below its all-time high, and gold, which is currently trading just 1% below its record high. In this context, it is difficult to justify Bitcoin being 19.5% below its March 14 peak of $73,757, regardless of whether the cryptocurrency is considered a risk asset or a hedge against potential disruptions in the US debt situation.
Investor sentiment toward Bitcoin has also been dampened by the fact that Democratic presidential candidate Kamala Harris has yet to articulate a clear stance on the crypto industry, beyond vague statements during the campaign. In contrast, Republican candidate Donald Trump has announced plans to fire Gary Gensler as chairman of the U.S. Securities and Exchange Commission (SEC). Industry leaders have been vocal in their criticism of Gensler’s lack of clarity regarding the regulatory framework for crypto companies in the U.S.
Recent economic data supporting the Federal Reserve’s successful efforts to curb inflation without triggering a recession may have contributed to the decline in interest in Bitcoin. U.S. retail sales rose 1% in July, beating economists’ expectations of a 0.4% gain. Meanwhile, the Labor Department reported 7,000 fewer initial jobless claims than the previous week.
Yung-Yu Ma, chief investment officer at BMO Wealth Management US, told Yahoo Finance that a “soft landing is in the works.” Essentially, a stronger macroeconomic environment boosts the stock market, reducing the appeal of Bitcoin as a standalone store of value.
From a trading perspective, the demand for leverage across BTC futures is an important indicator of investor sentiment. When the market is bullish, bullish investors often open leveraged positions, pushing funding rates on perpetual contracts into positive territory. Rates between 0.2% and 1.2% per month typically indicate neutral market conditions, while rates below this range are considered bearish.
Bitcoin futures 8-hour funding rate | Source: Coinglass
Data shows that the funding rate for Bitcoin perpetual futures was mostly negative on August 14 and 15. In fact, the last time the indicator was bullish was on June 8, when Bitcoin tested the $72,000 resistance level. This makes sense, as perpetual futures are the preferred leveraged instrument for retail traders, while monthly contracts, which require rolling over, typically trade at a premium or discount to the spot market.
Demand for Crypto in China Has Dropped Sharply
To determine whether buyer confidence is limited to perpetual futures contracts, it is worth looking at the demand for stablecoins in the Chinese market. Typically, strong retail demand for cryptocurrencies pushes stablecoins to trade at a premium of 2% or more to the official US dollar rate. Conversely, a discount often signals fear, with traders looking to exit the crypto market.
On August 15, Tether (USDT) was trading at a 0.2% discount in China, indicating that demand for the cryptocurrency had dropped. This is a notable change from August 6, when traders paid a 2% premium for USDT, marking the lowest level of this index in three months.
USDT vs USD/CNY Peer-to-Peer Trading | Source: OKX
Based on BTC derivatives indicators and stablecoin demand in China, Bitcoin faces a challenging path to reclaiming the $62,000 support level. However, historical data shows that retail traders tend to react to market movements rather than predict them, so a breakout cannot be completely ruled out.
Source: https://tapchibitcoin.io/bitcoin-tri-tre-khi-cac-yeu-to-dam-gia-tiep-tuc-dien-ra.html
