It is starting to seem that Bitcoin traders are a bit too optimistic for their liking.
The leading cryptocurrency has exploded higher in the past two days, from weekly lows of $ 13,300 to highs near $ 16,000. This rally comes as the US dollar has fallen lower on expectations that Joe Biden will enter the White House in the presidential election.
Bitcoin may move higher if the US dollar moves lower, but futures market data shows that the rally is quickly becoming unsustainable. Futures market funding rates are finally starting to tap higher after the spot market-led rally.
Bitcoin could quickly correct to the disadvantage if longs become overloaded and liquidated at a lower level. In other words, a long pressure can arise.
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Dangerous Bitcoin Futures Market
Bitcoin’s rise to $ 16,000 was based on a surge in spot market volumes as investors, both private and institutional investors, en masse bought Bitcoin for safekeeping.
But data shows that this is starting to change as the market excels. A crypto asset analyst shared the chart below after the rise, noting that the Bitcoin futures market is heating up:
“Retail is starting to believe again. For the first time since August, we have what is considered bearish funding. Binance L / S ratio is rising rapidly. “
The chart shows that the funding rate has started to explode higher into a potentially “bearish” sign, while the positioning of long and short traders in the stock market has rapidly increased.
Chart of BTC's price action over the past few weeks with analysis by crypto trader Byzantine General (Byzgen on Twitter). Source: BTCUSD from TradingView.com
The same trader added in a later tweet that he has noticed that OKEx traders have taken similar steps, increasing their exposure to Bitcoin longs rather than the mint on-site platforms.
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Fear and greed drive higher
Beyond expectations of a correction, Bitcoin’s Fear and Greed Index has hit multi-year highs with 92 points.
Many see this as a sign that the market will correct as investors have become too optimistic too quickly.
Related reading: 3 Bitcoin On-Chain Trends Show A Macro Bull Market Is Growing
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com Bitcoin Futures Traders Are Too Bullish After Pump to $16,000