The price of Bitcoin has experienced a sharp fall in recent weeks, reaching below $30,000, however, some metrics suggest that this level could be the level of least resistance for the cryptocurrency, so there could be a recovery so longed for by many (including myself) in the short term.
One of the data that supports this thesis is that of the financing rate of Bitcoin perpetual contracts, which measures the balance between buyers and sellers in the derivatives market. A negative funding rate indicates that there is more selling than buying pressure, which could lead to a cascading liquidation of leveraged positions. However, it could also be a sign that the market is oversold and that there is room for a bounce.
Another piece of data that shows the upside potential of Bitcoin is the ratio between the spot price and the futures price, known as the basis. A negative basis means that futures are trading below the spot price, implying a lack of confidence in the future of the cryptocurrency. However, it could also be an opportunity for investors who want to take advantage of the price difference and bet on an increase in the value of Bitcoin.
Finally, a third piece of data that indicates that Bitcoin could recover is that of the activity on the network, measured by the number of active addresses and the volume of transactions. These indicators reflect the interest and demand for the cryptocurrency, and usually have a positive correlation with the price. According to the data, activity on the Bitcoin network has increased in recent weeks, suggesting that there is a strong user base and that the price drop could be temporary.
Although the price of Bitcoin has suffered a strong correction, there are several factors and indicators that indicate that there could be a change in trend in the short term. Negative funding rate, negative basis, and network activity are some of the factors that could drive a recovery of the cryptocurrency above $30,000, which is shaping up to be the level of least resistance. WITH STRENGTH BULLS!
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Buy Me a CoffeeAuthor's Note: The opinion expressed here is not investment advice, is provided for informational purposes only, and reflects the opinion of the author only. I do not promote, endorse or recommend any particular investment. Investments may not be right for everyone. Every investment in the market and every trade you make involves risk, so you should always do your own research before making any decision. I do not recommend investing money that you cannot afford to chair, as you could lose the entire amount invested.
