Bitcoin 360 #15: 9th July 2021
Hello everyone, welcome to the latest Bitcoin 360! On the cards today: funding. If you don’t know about it, don’t worry, I will explain all. Then we will turn to technical analysis. Have a nice read!
Negative funding, a rare occurrence that needs highlighting
Now I’m going to talk about funding. Some of you may not be familiar with this term, and that is a good thing, because I will take the time to explain it.
Funding is the periodic shift of cash between long and short traders, based on the difference between the future contract price and the spot price. This makes it possible to regulate and reduce the difference between the two contracts, so that the price of the future contract is as close as possible to the index. A future contract more expensive than the index will cause strong funding, meaning the longs will pay the shorts and encourage people to short (i.e. sell), thus regulating the price.
Funding remained negative throughout March on the futures market. The last time this scenario occurred was during the purge of March 2020, but today it corresponds to BTC bottom.
Are we going to relive a similar scenario? We don’t know, but in the meantime this gives an bullish indication and a potential way forward for Bitcoin.
Volatility coming up?
As far as technical analysis is concerned, the situation is not changing much, but we still feel that we are maturing this range. The up and down terminal of the range are clearly defined. The price reacts extremely well on these levels. If we do not trade the ranges, it is better, in this case, to take a step back and wait for a clearly defined situation. Nevertheless, the highs seem to be lower and lower, indicating a potential weakness of the bulls.
The price will have to break this resistance on the RSI before it can look higher.
On the four-hourly, the weekly low has been reached and liquidity has been taken. The ongoing bullish engulfing candle on this chart shows the momentum of buyers, as well as the wicks below this level. Note the liquidity below the three tops: a lot of stop losses being triggered!
Support is not very far away, so this level should be a buy. Be careful all the same, the medium-term trend remains bearish.
On the hourly, we are forming a beautiful W, a trend reversal signal. This W, plus additional support on the weekly, makes two bullish signs. Be careful all the same, note the dotted line of resistance that could block the rise. Finally, if we break this level, note a resistance of $35,000.
I would like to see an increase in volumes to prove that buyers are here at these levels. Let’s stay on the lookout for the next moves and the direction it’s going and try to follow it. We don’t want to play it rebelliously, against the trend.
Never invest more than you can afford to lose and DYOR. Happy trading and see you next Friday for a new article on CoinTribune!
Passionate about technical analysis and technology, I have been diligently following cryptocurrencies since 2017. Beyond trading and investing, I try to democratise, in my own way, the ecosystem that will undoubtedly change our habits in the future!