Funding

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Bitcoin (BTC) has remained range-bound for the better part of the last week, hovering just below its latest all-time high (ATH) of $111,980 reached on May 21. Despite this milestone, speculative activity appears to be subdued, as funding rates on Binance – one of the largest crypto exchanges – continue to be in neutral territory.

Bitcoin Funding Rates Remain Neutral Despite New ATH

According to a recent CryptoQuant Quicktake post by contributor Amr Taha, Bitcoin funding rates on Binance have stayed close to zero, even in the wake of a new ATH. This subdued level of funding suggests that excessive leverage among retail traders is currently absent – a positive sign for the sustainability of the ongoing rally.

Source: CryptoQuant

For the uninitiated, funding rates are periodic payments exchanged between long and short traders in perpetual futures contracts to keep the contract price aligned with the spot price. When the rate is positive, long traders pay shorts, and when it’s negative, shorts pay longs – reflecting market sentiment and leverage.

In the current context, funding rates near zero indicate a balanced sentiment between bulls and bears, with neither side aggressively leveraging their positions. This neutrality points to a more stable market environment, reducing the risk of sudden liquidations and price crashes.

Adding, Taha brought attention to recent long-side liquidations that occurred when BTC slipped below two crucial price levels, $108,500, and $107,500. These events were captured in the below Bitcoin Buy/Sell Pressure Delta (90) chart, which further supports the narrative of cautious market participation.

Source: CryptoQuant

If funding rates continue to hover around zero, it could pave the way for further sustainable growth in BTC’s price. Combined with the current Buy/Sell Pressure Delta – which remains far below previous peak levels – there appears to be considerable upside potential remaining.

Inflows From New Investors Remain Sluggish

While neutral funding rates offer hope for continued price appreciation, on-chain data shows some signs of concern. The Unspent Transaction Output (UTXO) Age Band distribution indicates that inflows from new investors – those holding BTC for less than a month – remain sluggish, even after the recent ATH.

In a separate Quicktake post, analyst Avocado_onchain noted that the share of new investors has lingered around 30% during the current cycle, compared to over 50% in past bull runs. They cautioned:

In summary, if past patterns hold true, Bitcoin’s upside may be limited without significant inflows from new investors. For now, monitoring the growth in the share of new investors will be key to assessing future market direction.

Meanwhile, the Golden Ratio Multiplier suggests that BTC could soon enter a fresh price discovery phase, with potential targets as high as $130,000. At press time, Bitcoin trades at $107,617.

BTC trades at $107,617 on the daily chart | Source: BTCUSDT on TradingView.com

Featured Image from Unsplash.com, charts from CryptoQuant and TradingView.com

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