Decoding Bitcoin's Next Move Based on Funding Rates and Key Market Metrics

Bitcoin currently appears to be taking a breather after achieving a new all-time high (ATH) above $109,000 earlier this week. So far, the asset has

After reaching a new all-time high (ATH) above $109,000 earlier this week, Bitcoin appears to be pausing for breath. So far this week, the asset has seen a slightly reduced upward momentum with the price hovering just above $104,000.

However, despite the slowing upward momentum, Bitcoin’s recent performance has prompted renewed interest in the market. CryptoQuant analyst Burak Kesmeci recently shared his insights into Bitcoin’s price behavior and key market indicators, shedding light on potential future moves.

In a recent post on the CryptoQuant QuickTake Platform, Kesmeci’s analysis focused on Binance Bitcoin Funding Rates, a metric that provides notable clues about market sentiment and dynamics.

By reviewing historical data from previous bull cycles, he identified three distinct phases that can serve as a framework for interpreting the current market environment.

According to Kesmeci, during the 2020-2021 bull run, Binance Bitcoin Funding Rates moved through three distinct phases:

Phase 1 (July 2020): Funding rates remained stable at 0.01 for several weeks before a surge in demand pushed them up. This phase acted as the “calm before the storm,” with Bitcoin rising from $9,000 to $12,000 as funding rates increased to 0.10.

Phase 2 (November 2020): After an initial rally, Bitcoin experienced a correction. Funding rates briefly turned negative before flipping positive again, supporting Bitcoin's climb from $12,000 to $19,000.

Phase 3 (December 2020): As Bitcoin crossed its previous highs and surged past the $60,000 mark, funding rates climbed significantly, indicating strong market support.

Currently, Kesmeci notes that Binance Bitcoin Funding Rates are at the baseline level of 0.01—consistent with the early stages of a bull cycle. The analyst noted, “Analyzing recent data, I believe we’ve completed the first two phases of this bull cycle. For the third phase, I’ll be watching closely to see if the Binance Bitcoin Funding Rates manage to climb above 0.01.”

The analyst mentioned that a sustained rise above the 0.01 level would suggest heightened futures market activity and could lead to another significant upward move.

However, Kesmeci also cautions that elevated funding rates are often unsustainable, and markets tend to correct through “long squeeze” events that restore balance.

Key Metrics And Divergences In The Market

In a separate analysis, another CryptoQuant analyst, TraderOasis, explored several critical metrics, including the Coinbase Premium Index, open interest, and funding rates, to assess Bitcoin’s market health and potential direction.

TraderOasis highlighted a divergence between the Coinbase Premium Index and Bitcoin’s price movement. While the asset reached a new peak above $109,000, the Coinbase Premium Index formed a lower high. This lack of alignment raised concerns about the sustainability of the current price trend.

Furthermore, a divergence between open interest and price also suggested that the market might lack the robust foundation needed for continued upward momentum. According to TraderOasis, a healthy uptrend requires these metrics to be more closely aligned, which would signal strong investor confidence and a stable market structure.

Finally, the analysis also touched upon funding rates, indicating a recent bearish sentiment among traders. However, TraderOasis noted that such conditions often precede sharp price movements.

The analysis suggested the possibility of an initial upward spike to shake out bearish positions, followed by a subsequent pullback. This pattern, if realized, could set the stage for a more sustainable long-term uptrend.