Why one analyst is concerned after Bitcoin tapped new all-time highs yesterday 🚨 This article is 4 years old...
Why one analyst is concerned after Bitcoin tapped new all-time highs yesterday
2 min read
Updated: Dec. 2, 2020 at 12:42 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bitcoin tapped new all-time highs on top exchanges yesterday, reaching $19,950 in some markets. The CME’s Bitcoin futures market also saw a strong surge amid institutional buying activity.
There has since been a $1,000 retracement to the high $18,000s. Some analysts are worried that this is the start of a wider correction.
Why analysts are concerned about Bitcoin’s price action
Tyler D. Coates, a technical analyst and author, recently noted that the funding rates of top Bitcoin futures platforms are giving him pause.
The funding rate is the fee that long positions pay short positions on a recurring basis to ensure that the price of the future stays close to the underlying market. A high funding rate suggests that there are overleveraged long positions. High funding rates are often seen prior to corrections, as seen in mid-2019, February of this year, and previous rallies.
Coates, pointing out that the funding rates on BitMEX, recently reached multi-month highs of 0.25 percent daily, wrote:
“The daily funding rate on bitmex is a major concern, & it is a signal that weak hands are buying what strong hands are selling. The last funding spike occurred on 11/24.”
On some exchanges, this spike was even more severe.
On ByBit, the predicted funding rate reached over 0.20 percent for every eight hours. And on FTX, the hourly funding rate hit 0.008 percent.
Such a strong surge has not been seen in a while.
Coates added that with the Crypto Fear and Greed Index reaching levels indicating “extreme greed” in the market, he is fearful that Bitcoin could end up dropping:
“This is happening while price tests the 4h sky (emasar trim zone) and it’s leading me to believe that this isn’t the time to punch through $20k. Sure hope that I’m wrong but in the meantime I’m selling some here and entering orders to rebuy on the 4h beach (emasar buy zone).”
This skepticism has been echoed by a number of other analysts in the space.
“Bitcoin Jack,” a prominent crypto-asset analyst that predicted the V-shaped reversal that took place in March, recently said:
“You’ll probably won’t like it but I re-entered and exited BTC again on this dump and recovery. 18.4-18.5 level, as outlined in my vids, hit my bids but I have jumped out again at 19.3.”
Long-term trends intact
Many investors remain convinced that the long-term uptrend is intact despite whatever shortcomings may befall Bitcoin in the near term.
Tyler Winklevoss, co-founder of Gemini and a Bitcoin billionaire, recently told viewers of CNBC’s “Squawk Box” segment that he thinks the coin could rally 2,500 percent in the coming years. This would mean that it passes the $500,000 milestone in the years ahead.
His belief is based on the sentiment that BTC will surmount gold as the world’s foremost non-sovereign store of value.
"We've just been HODLing," says @tyler on #btc. "We think there's a 25x from here." #bitcoin pic.twitter.com/dspeSaD3eo
— Squawk Box (@SquawkCNBC) November 30, 2020
Bitcoin Market Data
At the time of press 12:42 am UTC on Dec. 2, 2020, Bitcoin is ranked #1 by market cap and the price is down 4.04% over the past 24 hours. Bitcoin has a market capitalization of $349.54 billion with a 24-hour trading volume of $49.12 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 12:42 am UTC on Dec. 2, 2020, the total crypto market is valued at at $560.24 billion with a 24-hour volume of $231.49 billion. Bitcoin dominance is currently at 62.38%. Learn more about the crypto market ›
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In this article
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
BitMEX
HDR Global Trading Limited owns and operates BitMEX which is a trading platform that offers investors access to the global financial markets using only Bitcoin.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Bybit
Bybit is a cryptocurrency derivative trading platform established in March 2018 and registered in the BVI.
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Tyler Winklevoss, known for his pioneering role in the cryptocurrency realm, is a Harvard University alumnus with a degree in Economics and holds an MBA from Oxford University.
Cameron Winklevoss, a renowned figure in the cryptocurrency sector, is a Harvard University graduate with a degree in Economics and holds an MBA from Oxford University.