Fresh long Bitcoin positions open on exchanges as funding rates turn positive
On-chain data shows that Bitcoin funding rates have turned positive, suggesting that there have been some new long openings on derivatives exchanges.
Bitcoin funding rate turns green after derivatives exchange surges
As pointed out by an analyst in a CryptoQuant post, the new long positions could drive the price up in the short term.
There are mainly two Bitcoin indicators that are relevant here, the derivatives exchange inflow CDD and the funding rates.
First, the “derivative exchange inflow CDD” is a metric that tells us whether old BTC supply is moving into derivative exchange wallets or not.
When the value of this metric increases, it means that a large number of previously dormant coins are entering these exchanges right now.
Since investors usually deposit BTC into derivatives to open up new positions in the futures market, this type of trend can lead to higher volatility in the price of the crypto as a result of increased leverage.
Now, here is a chart showing the trend of the 7-day moving average of Bitcoin derivatives exchange CDD over the past few days:
Looks like the 7-day MA value of the metric has spiked up recently | Source: CryptoQuant
As you can see in the graph above, CDD inflows for Bitcoin derivatives have increased in the last day, suggesting that an old supply of BTC has just been deposited on these platforms.
Dormant supply usually belongs to the most resolute holders in the market, so any movement by them can have noticeable impacts on the crypto.
The other value of interest here is the “funding rate”, which measures the periodic fee exchanged between traders in the futures market.
When this indicator has positive values, it means that there are more long positions open than shorts right now. On the other hand, negative values suggest that shorts are currently overwhelming longs.
The chart below shows the latest trend in Bitcoin funding rates.
The value of the metric has turned positive over the past day | Source: CryptoQuant
From the chart it is clear that after the latest announcements funding rates have turned back to positive after being slightly negative yesterday.
This suggests that the HODLs who transferred these coins have opened new long positions in the futures market.
Quant notes in the post that these fresh long positions could support Bitcoin in the short term.
BTC price
At the time of writing, Bitcoin’s price is hovering around $20.5k, up 2% in the last week.
Looks like BTC has surged up a bit in the past day | Source: BTCUSD on TradingView
Featured image from Bastian Riccardi on Unsplash.com, charts from TradingView.com, CryptoQuant.com
