Bitcoin price action has not seen much stability in recent weeks. The constant price fluctuation has frustrated the market so much that some of the investors actually want the price to fall further.
Shorts of the house!
On-chain data has shown that in recent days there has been a significant increase in investors looking to short the king coin. That is about the high demand for short-term interest in Bitcoin.
In the past week alone, this shorting rate has risen by 329.66%. And the consequences of this are visible on the performance of the king’s coin.
Due to the recent shorting, the average funding ratio has turned negative. The indicator in the chart below is revisiting the negative zone, which is a good sign. In particular, around the first week of March, funding rates were worse.
It is also interesting to note that until the first week of March, crypto-margined futures contracts were on a downward trend.
Unlike stablecoin margin futures contracts, crypto margined contracts are vulnerable to a price drop. In such a situation, they not only lose their profits, but also lose the value of the asset.
Stablecoin margined contracts, on the other hand, are immune to loss of value. These are only preferred by long traders. Going short leads to immediate liquidation as they cannot be hedged.
As a result, crypto-margined contracts fell by 27% in 10 months. However, their recent surge may be an indication that investors are regaining confidence in Bitcoin.
Otherwise there is no reason why investors should dare to pull such a stunt in the midst of a bear market. (Increase in the charts)
Secondly, this confidence is supported by the aforementioned negative funding ratio. The decline in the funding ratio is actually a good sign for investors, as they indicate buy signals.
Multiple funding ratio bottoms have been followed by a price rise in the past, although those declines have been much larger. Regardless, if the indicator’s historical tests come in as expected, the price can be expected to rise in the coming days. (ref. Bitcoin funding rate image)