Bitcoin bears, or investors betting on the price decline of Bitcoin, have now overtaken bulls in futures markets.
Bitcoin (BTC) bears have overtaken the bulls based on futures market funding rates, according to analyst and verified CryptoQuant author Axel Adler.
The analyst wrote in a Sept. 10 X post:
“Update on the average Funding Rate. An orange bar has appeared. There are now more bears than bulls. I think we won’t have to wait long for the outcome.”
BTC: Futures Perpetual Funding Rate. Source: Axel Adler/X
However, this doesn’t necessarily mean more downside for Bitcoin’s price, according to Kristian Haralampiev, structured products lead at Nexo.
He told Cointelegraph:
“Average funding rates have been consistently on the lower side in the past weeks. BTC Basis APR has been quite stable in spite of the weak price action, suggesting a healthy ratio of leverage in the market and confidence in the bullish end-of-year projections.”
The price of Bitcoin has been in a downtrend, falling over 4.3% during the past month and unable to rise above the $64,500 resistance. According to Bitstamp data, the world’s first cryptocurrency fell nearly 18% during the past three months.
BTC/USD, 3-month chart. Source: TradingView
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Interest rate cuts could catalyze Bitcoin rally — as long as BTC remains above $50,000
The long-awaited interest rate cut could catalyze Bitcoin’s parabolic run as long as Bitcoin can remain above the key $50,000 psychological support.
According to Nexo’s Haralampiev, Bitcoin’s continued rally throughout the remainder of 2024 will largely depend on its ability to stay above this key support level. He added:
“A short-term dip below $50,000 would potentially signal further declines and sideways action for Bitcoin. However, if Bitcoin remains stable above $50,000, interest rate cuts could become the driving force for a late 2024 rally.”
Investors are increasingly expecting an interest rate cut from the United States Federal Reserve at its upcoming meeting on Sept. 18, which could catalyze the next Bitcoin leg up.
Odds of an interest rate cut. Source: CME FedWatch
According to the latest data from the CME FedWatch tool, the odds of a 25-basis-point rate cut currently stand at 83%, while the odds of a 50-basis-point rate cut are at 17%.
A potential interest rate cut could be the next major catalyst, added Haralampiev:
“If Bitcoin remains stable above $50,000, potential interest rate cuts could drive a significant rally.”
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Bitcoin ETFs break the eight-day bleeding streak
After eight days of consecutive net outflows, the Bitcoin exchange-traded funds (ETFs) have started to accumulate once again.
The US ETFs saw their second day of positive inflows on Sept. 10, amassing a cumulative $117 million worth of Bitcoin, according to Farside Investors data.
Bitcoin ETF Flow (USD, million). Source: Farside Investors
Bitcoin ETF inflows “serve as a strong indicator of investor sentiment” in the crypto market, according to Haralampiev.
ETFs accounted for about 75% of new investment into Bitcoin by Feb. 15 as it surpassed the $50,000 mark.
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