The Quick Rise of Bitcoin
In a surprising twist, Bitcoin (BTC) bounced back from around $44,800 to over $50,000 in just 22 hours. That’s faster than a cat video going viral! What triggered this sudden upward trajectory? Well, hold on to your crypto wallets, because we’ll break down the three major factors behind this momentum.
A Look at Low Funding Rates
First up, let us talk about those funding rates. Across major futures exchanges—think Binance, Bybit, and Bitfinex—the funding rate for Bitcoin has plummeted to 0.01%. This is about as low as your friend’s enthusiasm for Monday mornings. In contrast, during the rally from the $40,000s to $58,000, funding rates were comfortably lounging above 0.1%.
High funding rates suggest an overcrowded market, which can lead to a long squeeze. But with the current figures, it seems like Bitcoin’s chances of facing a sudden downturn are dwindling. If we keep this low rate, we might be in for a sustainable uptrend—trust me, your wallet will thank you!
Square’s Big Bitcoin Investment
Next on the list, let’s chat about Square, the U.S. payments giant. On February 24, they splurged a whopping $170 million on Bitcoin, adding to their previous $50 million purchase in October 2020. Talk about commitment! Amrita Ahuja, Square’s CFO, believes that Bitcoin could be the go-to currency in the future. It’s safe to say they’re in it for the long haul, and this type of institutional confidence can only add fuel to the fire!
The Stabilizing Spot Market
Last but not least, the spot market is making waves. At one point, Bitcoin’s price on exchanges like Coinbase was trailing by $600 when compared to futures exchanges. However, after the price bounced back from $44,800 to $48,000, we saw signs of a bearish retest. But fear not! Experts, such as John Cho from GroundX, are cautiously optimistic about Bitcoin’s performance.
If Bitcoin can maintain a position above $50,600, we could see a rise toward the $56,000 resistance level. It’s as if Bitcoin is trying to casually stroll away from that bearish retest—no need for drama!
Riding the Bull Market Waves
Now, a little reminder for you: corrections are as common in a Bitcoin bull cycle as ‘just one more episode’ is on Netflix. Back in the fabled 2017 bull market, Bitcoin experienced nine major pullbacks ranging from 20% to 40%. But despite those dips, it increased twentyfold from its previous all-time high. So, if you see the number dropping, don’t panic! Just make sure you keep your hands off the panic-sell button.
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