Retail Traders Short Bitcoin as Aggregated Funding Rate Drops

The sudden rise of Bitcoin has rocked the market, and the retail traders are still struggling to make corrections. As retail traders continue to go short, the entire funding rate has become negative once again. This indicates that most market participants are taken by surprise by the sudden rally that Bitcoin has made. As of 26 June, Bitcoin price reclaimed the $107K mark, as the bulls eye the $109K in the coming days. The change has been accompanied by fears of a possible price growth as the mood surrounding the asset changes rapidly.

The recent Bitcoin actions are mostly formed by the increased volatility of the processes on the market. Notably, there is tension between the bullish investors and the bearish traders. Retail traders are being dragged along with the movement of Bitcoin, with their positions being prone to being liquidated at any moment. The existence of this pressure on the short positions is one of the crucial reasons why the uncertainty level increases, and the price of Bitcoin may grow further.

A Warning for Bears: Aggressive Short Positions at Risk

The rise in short positions in both Bitcoin and Ethereum has rendered it easier to liquidate bears. As per the recent data provided by Alphractal, aggressive short positions are at liquidation levels. In the case of Bitcoin, the liquidation targets are set above $113K, whereas in the case of Ethereum, the targets are beyond $2900. It implies that an additional price rise in Bitcoin may trigger an immense liquidity crisis for its opponents, who believe that the price may decline.

The implications of these liquidations are twofold. In that they may accentuate this upward trend in the value of Bitcoin. Further, liquidations tend to result in short-covering, which further increases the price. Second, high liquidation rates of short positions may indicate that the market consolidation process is not over. There still might be some more bullish movement in the near future. The sentiment analysis carried out by Alphractal indicates that a reversal would be short-lived, with the bullish sentiment beginning to gain an ascendancy.

To the traders, this is a very important change in the dynamics of the market. The individuals who have not rebalanced their investments might actually be in trouble with huge losses in case Bitcoin resumes its upward run. On the other hand, the investors who have succeeded in positioning themselves in the direction of the bullish movement will enjoy the possible rise in the costs of the asset.

Potential for Further Upside

According to Alphractal’s recent report, the position in the market today is such that it points to the opportunity of having additional upside. The sentiment analysis with the help of funding rates demonstrates that the markets exist on the side of bullishness.

The more short positions will be under the threat of liquidation, the more likely it is that Bitcoin will break major resistance levels. Funding rates and sentiment measures are keenly tracked so that traders can figure out any possible breakout levels. Such measures indicate that, although there has been some persistence about the uncertainty in the market, the price of Bitcoin might be increasing.

In the case of Ethereum, it is no different. The price of ETH could also match the momentum in the upward direction. This is due to the current presence of aggressive short positions and huge resistance overhead. This, however, is dependent on the status of Bitcoin, since in most cases, ETH tends to be led by Bitcoin. It is recommended that traders they should observe the movement of Bitcoin. This is because, often, the price of Bitcoin movement most probably determines the fate of Ethereum and other cryptos.