The price of Bitcoin shows stability above $10,000. Thus, traders are explaining where the crypto’s next big move is headed.
For nearly a week, the price of BTC has been ranging from $9,800 to $10,500. It was after a shortfall from almost $12,100 seen on September 1. Bitcoin is struggling to show any unusual price movement. Thus, generally, traders are cautious.
Traders forecast Bitcoin and perceive and recover the ongoing consolidation phase as a healthy pullback over the medium or long term. Bitcoin raised from $9,005 to $12,486 Coinbase from July 16 to August 17. The retreat is arguably necessary for neutralizing the futures market.
Bitcoin’s daily volume’s large portion comes from the market of futures. Exchanges of cryptocurrency futures are using a mechanism called ‘funding.’ It is to achieve a balance in the market of Bitcoin. If the market is majority long, the mechanism is forcing long contract holders to compensate the short seller for a portion of their positions and vice versa.
Usually, when the rally of Bitcoin overextends, it causes the futures markets to get overcrowded. Thus, funding rates soar. Reducing the probability of a short or long squeeze, in the event of a pullback, it allows funding rates to stabilize.
Guy Hirsch is managing director of the eToro trading and brokerage platform. Dennis Vinokourov is the head of research at crypto exchange and institutional brokerage provider BeQuant. Thus, they said that the medium-term outlook of BTC is positive. It is because of the various technical and fundamental factors.
There was the rejection of BTC at $12,000. So, analysts attributed it to many factors. Vinokourov said that the aggressive unwind of crowded position relates to DeFi assets. Thus, it might have contributed to the decline. Nevertheless, other factors, like miners selling off their stashes, and whales taking profit, might have applied selling pressure on Bitcoin.
That is the situation with cryptocurrencies.