BTC Volatility Reaches One-Year Low on Top of Negative Funding Rates and Premium

[RSRS]

There has been negative sentiment in the cryptocurrency market for several months. Bears have dominated Bitcoin’s price action since at least the May 19 crash. Since then, however, the BTC price has been consolidating, and weakening volatility has provided a blue bottoming signal.

The recent visit of the Puell Multiple indicator to oversold territory coupled with negative funding rates in the futures markets and a negative premium on GBTC provides interesting data for interpretation. These indicators point to an upcoming big move in Bitcoin’s price. The question remains: will it be up or down?

Negative funding rates and premium
Since the monumental crash of 19 May 2021, when Bitcoin’s price bottomed at $30,000, funding rates on most cryptocurrency exchanges have turned negative. This means that traders in the futures markets must pay a premium to maintain their short positions throughout the ongoing May-July 2021 BTC consolidation period (red rectangle).


BTC Funding Rates / Source: bybt.com
This situation means that most investors are expecting declines and market sentiment is bearish. On the other hand, it is also a hidden bullish signal, as it turns out to be more profitable to take a long position and gives exchanges and whales the opportunity to set a bear trap.

We see a similar situation on the premium indicator for the Grayscale Bitcoin Trust (GBTC). Premium is the difference in the valuation of an asset in a given fund and the market price.

More information