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Funding Rate Hits 6-Month High Ahead of CPI — 5 Things You Need to Know About Bitcoin This Week

Bitcoin (BTC) Begins The Familiar FUD Battle From The Second Week Of November — How Will BTC Price Action Respond?

The largest cryptocurrency managed to close the week just below $21,000 on Nov. 6. This is an impressive multi-week high.

After seeing highs near $21,500 over the past week, there is still no catalyst that can break the market status quo, but it is very likely to do so next week.

Headline US inflation data for October is due out on Nov. 10, but unemployment claims and multiple Federal Reserve speeches could also impact risk asset volatility. I have.

An unexpected twist from within the crypto realm comes in the form of turmoil involving exchanges FTX, Alameda Research, and Binance.

Liquidity concerns escalated as Binance CEO Changpeng Zhao revealed plans to sell his entire platform cache of FTX’s proprietary token, FTT.

Bitcoin has responded in line with market sentiment overnight, but will debacles prove more than classic crypto FUD going forward?

Cointelegraph will take a look at some of the major factors affecting BTC’s price action over the next few days.

FTX Concerns Disrupt Weekly Earnings

BTC/USD fell to the weekly close, but managed to record its best weekly candlestick since mid-September.

According to data from Cointelegraph Markets Pro and TradingView, Bitstamp is capped at $20,900 for the week ending November 6th.

BTC/USD 1-week candlestick chart (Bitstamp).Source: Trading View

This will allow Bitcoin to protect its trading horizons and avoid any significant disruption of the current paradigm.

While nearing the high end of the range, news on FTX, including Binance, appeared to dampen the mood significantly, and Bitcoin ultimately suffered a loss of $21,000.

Binance CEO Changpeng Zhao (also known as “CZ”) said, “As part of Binance’s exit from FTX equities last year, Binance received approximately US$2.1 billion worth of cash (BUSD and FTT).” wrote. twitter thread.

“Due to recent disclosures, we have decided to liquidate all remaining FTTs on our books.”

Zhao added that the sale of Binance’s holdings of FTX would take “months” and acknowledged that the market as a whole could be affected.

in him my threadMeanwhile, FTX CEO Sam Bankman-Fried referred to “unsubstantiated rumors” about liquidity issues.

“Thank you to those who have stayed and welcome everyone else when this blows,” he wrote in an optimistic post to his followers overnight.

So far, the market reaction has been less than positive. Looking at the top 10 cryptocurrencies by market cap shows him 24 hour losses on some tokens close to 10% at the time of writing.

For Bitcoin traders, it’s time to take advantage of the one-week retracement that we believe will lead to further gains.

“Lost lower timeframe support. Nice little pullback. We are considering going long again when we see it is the next support,” says popular trading account IncomeSharks I have written with an update.

Another post focused on potential cross-crypto gains.

“The daily total market cap looks good. Bullish or bearish, I think enough people are still sitting in cash to push it to 1.5 trillion.” read.

Total Crypto Market Cap 1-day candlestick chart.Source: Trading View

Michael van de Poppe, founder and CEO of trading company Eight, said: also said He will be looking to “buy dip opportunities” across cryptocurrencies in the short term.

The classic opposite view comes from fellow Crypto trader Il Capo, who argued that $21,500 marks the high point of the continuing downtrend.

“Seeing whales wanting to meet demands at 21500. A very quick fraud pump to this level would be the perfect end to the party. ETH into the 1700s,” he tweeted. part said.

Focus on CPI and US midterm elections

The Federal Reserve dominated the final week of October when it came to crypto asset performance thanks to its decision to raise interest rates by another 0.75%.

Once this is implemented, the market will turn its attention to another key figure this week: October’s Consumer Price Index (CPI) data.

Economists surveyed by Bloomberg estimated year-on-year inflation was 7.9%, down 0.3 percentage points from September.

A weaker-than-expected CPI could benefit cryptocurrencies and risk assets as it conceptually increases the chances of the Fed canceling rate hikes early.

But before the CPI and unemployment claims, there are US midterm election issues to address, themselves a potential source of volatility.

“Personally, I’m not in a rush to buy just yet,” noted social media personality @CryptoGodJohn Said follower.

“CZ vs SBF drama, Tuesday midterm elections, Thursday CPI.

The rate hike announcement was something of a false tone-setter, as it caused volatility and was canceled within days.

Meanwhile, fellow commentator Capital Hungry warned On the impact of stronger CPI inflation:

“If the US CPI remains high this week, we could see a reversal in gold’s rally, a return to strength in the US dollar, and a rebound in equities.”

The US Dollar Index (DXY) has made up for lost ground at the time of writing with a dramatic 2% per day decline on November 4th.

US Dollar Index (DXY) 1-day candlestick chart.Source: Trading View

Funding rate soars

As a warning signal to the bulls, Bitcoin funding rates have surged on derivatives exchanges, especially in the second half of the long.

As pointed out by Maartunn, contributor of on-chain analytics platform CryptoQuant, the funding rate is now at its highest in six months.

The funding rate is the mechanism used in perpetual contracts to bring the price closer to Bitcoin’s spot price.

A very positive funding rate suggests that the market expects BTC/USD to go higher, and traders are paying for the privilege of keeping BTC longer and longer.

The impact can be detrimental, as a price drop will result in the liquidation of a large number of overly bullish positions.

“And at the moment, funding rates are very high. Traders are betting higher and are willing to pay a lot of interest,” Maartunn explained, along with data from CryptoQuant.

“It doesn’t have to be bearish per se, but if the price starts to move in the opposite direction, you may be forced to let go of your position or be liquidated.”

An annotated chart of Bitcoin funding rates. Source: Maartunn/ Twitter

As reported by Cointelegraph, last month saw a record liquidation for 2022 as Bitcoin reached $21,000.

Maartunn added that the fundraising is “something to watch in the coming days.”

Minor misses difficulty recalibration

Bitcoin network fundamentals remain interesting, if not entirely bullish.

The latest data from on-chain monitoring resource BTC.com confirmed that network difficulty dropped by 0.2% on November 7th.

An overview of the basics of the Bitcoin network (screenshot). Source: BTC.com

The result is affecting miners whose profits are being squeezed even though hashrate has reached all-time highs.

A significant difficulty drop would help provide a level playing field for some players, and its absence would continue to put pressure on certain players.

Even Bitcoin’s largest public miners are “significantly underperforming BTC” in the current environment, said Sam Rule, market analyst at UTXO Management. clearly last week.

As reported by Cointelegraph, the combination of high hash rates and low miner profitability is still a potential cause of Bitcoin being classified as undervalued.

Bitcoin’s yardstick continues to dig further into the ‘cheap’ zone this month, posting rare lows.

Bitcoin yardstick chart.Source: Glassnode

Sentiment gauge hits 3-month high

Not all is pessimistic for crypto market sentiment.

RELATED: Bitcoin purchases ‘quickly disappear’ when CBDC launches — Arthur Hayes

According to the Crypto Fear & Greed Index, cold feet are being shaken off as bitcoin hits a new high since September.

Fear & Greed uses a basket of factors to measure sentiment with a normalized score between 0 and 100, and assigns different labels to categorize them (extremely greedy, greedy, neutral, fearful, extreme provide fear). weekend.

At 40/100, the optimism proved unsustainable thanks to a market pullback into the new week.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.