The Bitcoin Futures Sentiment Index has turned positive after 5 days of decline, indicating the return of buying pressure and that interest rates have peaked for the week.
Positive sentiment in the futures market is supported by weakened selling pressure, increased buying, a funding rate exceeding the week's highest, and low volatility indicating that investors are not in a hurry to take profits.
MAIN CONTENT
The sentiment in Bitcoin futures has reversed, with buying pressure prevailing after a period of sharp decline.
The selling pressure from short positions has weakened, with the funding rate and buy/sell index confirming a positive trend.
Low volatility and a small sell-side risk ratio mean that most investors are not in a hurry to leave the market, signaling the potential for a strong correction soon.
How is the sentiment in Bitcoin futures changing?
After 5 consecutive days of negativity, the Bitcoin Futures Composite Sentiment Index has shifted to a positive territory thanks to the return of strong buying pressure, according to CryptoQuant analysis.
"The positive futures sentiment index indicates that buyers are dominating and short-term selling pressure has eased, creating conditions for new cash flows to enter the market."
– CryptoQuant, Market Report August 22, 2024
When market sentiment reverses, spot prices often move in the same direction as this index, driving short covering and attracting new liquidity to join based on positive momentum.
For example, earlier in August, when the sentiment index dropped sharply below -1 and quickly reversed to positive, Bitcoin's price surged to $124,000. Earlier this week, the index fell to -0.7 and also turned positive, signaling the potential for a similar upward wave as before.
Has the selling pressure from short positions really decreased?
Recent data shows that short-term selling pressure has clearly eased, making way for buying pressure as technical indicators shift to positive territory.
According to CryptoQuant data, the Taker Buy/Sell Ratio has turned positive after 9 consecutive days of being negative. This indicates that buying pressure is significantly outpacing selling pressure, demonstrating active accumulation occurring in the futures market.
On August 22, this index reached about 1.05 – surpassing the neutral threshold, reflecting strong buying pressure over selling – consistent with market recovery expectations. Concurrently, the funding rate also increased to the week's highest level of 0.0095, indicating strong demand for opening long positions.
Will the buying pressure continue?
The signs of dominant buying pressure are increasing significantly, but the market simultaneously maintains low volatility, indicating that investors are not in a hurry to exit their positions.
Source: CryptoQuant
According to Checkonchain, Implied Volatility in the options market is only at 38% – quite low, indicating that traders do not anticipate strong immediate market volatility. The Futures Sell Side Risk Ratio is also only at 0.00126, showing that the selling motivation of investors in futures is very limited.
Combining the two factors of low volatility and low sell-side risk, the market is entering a state of low but stable liquidity, reflecting the patience and caution of long-term investors as well as those who have opened long positions.
Profits declining, are futures investors still holding their positions?
Although Bitcoin's price dropped over 5% this week, long positions continue to outpace short positions due to expectations of a strong reversal coming soon.
"The shift from sellers to buyers in the futures market is often a signal for significant price volatility, especially when selling pressure decreases sharply while profits remain low."
– AMBCrypto Report, August 23, 2024
Notably, the very low sell-side risk ratio and the decreasing profits limit the number of investors willing to "exit their positions". History shows that such periods often signal a major volatility event, which could be a strong price bounce or a subsequent deep correction depending on the movements of long positions.
In the event the market recovers as it did in early August, Bitcoin could soon reclaim the $115,000 mark, moving towards $117,000. However, if buying pressure is too great but prices do not rise correspondingly, the possibility of a correction below $110,799 remains, with a significant support area around $109,760.
What will determine the next trend of Bitcoin?
The future trend of Bitcoin depends on the interaction between buying and selling positions, volatility, and new cash flows. If the influx of capital continues to be abundant and there are no negative spikes, the recovery momentum will be strong.
If the funding rate and accumulation indicators exceed hot thresholds but prices drop due to a lack of upward momentum, the market could fall into a deep correction. This is the time for investors to closely monitor in-depth metrics such as funding rate, implied volatility, and long-term movements of large positions.
Comparison Table: Key Index Movements in the Bitcoin Futures Market Last Week
Index Minimum Maximum Current Value Main Meaning Futures Sentiment Index -0.7 Turns Positive Positive Buyers dominate Taker Buy/Sell Ratio Negative 9 days 1.05 1.05 Buying pressure exceeds Implied Volatility 38% 38% 38% Low volatility Funding Rate Below 0.0095 0.0095 0.0095 High demand for longs Futures Sell Side Risk Ratio 0.00126 0.00126 0.00126 Low selling motivation
Frequently Asked Questions
How long can the positive sentiment in Bitcoin futures last?
Positive sentiment may persist if buying pressure continues to dominate and the funding rate remains high, but sudden fluctuations from large cash flows or profit-taking behavior should be noted.
How to recognize strong recovery signals in the Bitcoin market?
Indicators such as the Taker Buy/Sell Ratio turning positive, rising funding rates, and sudden increases in implied volatility often signal large recovery waves.
Is low volatility a sign that the market is preparing for a major correction?
Prolonged low volatility combined with increasing buying pressure is a sign of market accumulation, often preceding a period of strong upward or downward volatility.
How to identify important support and resistance zones of Bitcoin?
Support and resistance areas are determined based on historical prices, recent large trading volumes, and the strong reaction of the Sentiment Index along with long-term positions.
What indicators should investors pay attention to when trading Bitcoin futures?
It is advisable to closely monitor the Funding Rate, Taker Buy/Sell Ratio, Implied Volatility, and Sell Side Risk Ratio to grasp market conditions and determine appropriate entry and exit points.
Source: https://tintucbitcoin.com/hop-dong-bitcoin-tang-115-000-usd-tiep/
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