Bitcoin’s funding rate in the futures and derivatives market has reached a negative level for the first time this year, indicating a shift in market sentiment after the halving. Analysts predict that the upside potential will be limited in the short term and that the spot price will consolidate.
Throughout this year, Bitcoin’s funding rate has been decreasing, and in the past week, it has turned negative for the first time since October last year. This comes as the leading cryptocurrency faces a cyclical price dip following the halving.
Currently, Bitcoin is trading at $63,593, experiencing a 4.14% drop in the past day from its intra-day high of $66,720. Despite this, investor interest remains high, with trading volume increasing by 33% to $31.9 billion. In the past week, Bitcoin has managed to gain 3.3% as it battles against the bearish market sentiment post-halving.
Research platform Kaiko has highlighted that investor interest in the derivatives market has been declining for several weeks, with the funding rate turning negative in the past week. This is the first time this has occurred since October last year.
However, since the halving, the funding rate at the top three exchanges, Bybit, Binance, and OKX, has slightly improved, according to data from Coinanalyze.
In an accompanying note, Kaiko stated that despite briefly turning negative before the halving, funding rates for Bitcoin perpetual contracts remained close to neutral. Negative rates mean that short sellers are paying longs to maintain their positions. Overall, open interest remains above $10 billion, although it has decreased from the record high in USD terms seen in March.
Looking ahead, Bitcoin’s cooling investor interest is evident in the BTC spot ETFs, which only attracted $9.8 million on Wednesday. Additionally, Grayscale recorded outflows of $130.4 million, resulting in a net outflow of $120.6 million in the sector.
The most significant development was the end of BlackRock’s IBIT ETF’s positive streak, as it failed to attract any new investments after 71 consecutive days of inflows. This streak placed it among the top ten longest ETF inflow streaks in history.
Analysts have mixed opinions on whether Bitcoin will experience the usual dump that follows every halving, as investors divert their funds to alternative coins. Some believe that Bitcoin will remain stable this time, considering its strong performance after previous halvings. Tyrone Ross, the founder of 401 Financial, stated that the halving should not change anything as it is already written in the code. Others, like Standard Chartered, are bullish and predict that Bitcoin will reach $150,000.