Bitcoin Investors May Need Futures Traders for an ‘Uptober’ – Here’s Why

by James · October 17, 2022

Bitcoins [BTC] fall from $22,000 to $19,000 did not invalidate the activities of the king coin futures traders. According to CryptoQuant analyst, Greatest_Trader, funding rates in the derivatives market have a big impact on the BTC price. The Cryptanalyst noted that BTC started the trip to its current price of $19,250 since funding rates turned negative. He said,

“Funding rates have turned negative again as the price has fallen from the $22K level and is consolidating with the $19K support. However, the metric’s values are significantly low compared to the 2019-2021 period.”

Here is AMBCryptos Bitcoin price prediction [BTC] for 2022-2023

Who will BTC come to the rescue?

According to Greatest_Trader, the current funding rates had not turned positive and if not revived, it could lead to a further BTC decline. As such, talk of an “Uptober” may well be in the gutter. A look at the funding rate on some exchanges revealed that the analyst’s concerns may be valid.

Sentiment, the on-chain analytics tool, showed that the find rate on Binance was neutral at 0%. The calculation on the DyDx exchange was also not different at 0.0001%. The implication of this was a reduced demand considering the BTC consolidation of late.

Source: Glassnode

Therefore, BTC short-term investors may need an increase in futures activity to trigger a significant rally. However, traders did not seem ready to get back into the fray.

This was due to futures open interest as revealed by Coinglass. According to the derivatives information portal, open interest on almost all exchanges was largely negative in the last 24 hours. For those who were positive, the price was significant insignificant. Thus, the possibility of a revival of the financing rate was less likely.

Source: Coinglass

To stop the downward spiral or not

In addition to the funding rate and open rate, BTC may require a significant increase in currency supply to gain bullish momentum. The reason for this is that futures trades do not take place on decentralized exchanges.

Unfortunately, according to Glassnode, the trend may not meet investors’ expectations. Based on data available from the platforms, BTC exchange supply had been in a downward trend since October 13. At press time, the total exchange inflow volume was 9,859.80. This was a large decrease from 41,727,07 on the date mentioned above. Therefore it may be difficult to expect a BTC rally in the short term.

Source: Glassnode

According to the four-hour chart, BTC On-Balance-Volume (OBV) closed lower than the previous 24 hours. At the time of writing, the OBV was 794,355. Compared to the value for most of last week, there has been strong selling pressure.

Furthermore, the Directional Movement Index (DMI) showed that selling strength (red) was higher than buying strength (green). Although close, the Average Directional Index (ADX) in yellow indicated that the selling pressure was not overboard at 23.04. So, BTC investors may see some breathing room in the coming days if the ADX goes further low. If not, the coin may lose its grip on $19,000.