{"id":14945,"date":"2022-11-07T08:12:08","date_gmt":"2022-11-07T08:12:08","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/funding-rates-hit-6-month-high-before-cpi-5-things-to-know-in-bitcoin-this-week\/"},"modified":"2022-11-07T08:12:13","modified_gmt":"2022-11-07T08:12:13","slug":"funding-rates-hit-6-month-high-before-cpi-5-things-to-know-in-bitcoin-this-week","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/funding-rates-hit-6-month-high-before-cpi-5-things-to-know-in-bitcoin-this-week\/","title":{"rendered":"Funding rates hit 6-month high before CPI \u2014 5 things to know in Bitcoin this week"},"content":{"rendered":"
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Bitcoin (BTC) starts the second week of November battling some familiar FUD \u2014 how will BTC price action react?<\/p>\n

The largest cryptocurrency managed a weekly close just below $21,000 on Nov. 6 \u2014 an impressive multi-week high \u2014 but remains fixed in a sticky trading range.<\/p>\n

Despite seeing highs of nearly $21,500 over the past week, there has yet to be a catalyst capable of breaking the market status quo, but the coming week has as good a chance as any of doing so. <\/p>\n

Nov. 10 will see key United States inflation data for October released, while jobless claims and multiple speeches from Federal Reserve officials may also impact risk asset volatility.<\/p>\n

An unexpected twist from within the crypto realm comes in the form of turmoil involving exchange FTX, Alameda Research and Binance.<\/p>\n

Concerns over liquidity have escalated as Binance CEO, Changpeng Zhao, reveals a plan to sell off his platform\u2019s entire stash of FTX\u2019s proprietary token, FTT.<\/p>\n

Bitcoin reacted in line with market sentiment overnight, but going forward, will the debacle prove any more than classic crypto FUD?<\/p>\n

Cointelegraph takes a look at some of the major factors set to influence BTC price action in the coming days.<\/p>\n

FTX worries disrupt weekly close<\/h2>\n

While falling into the weekly close, BTC\/USD still managed to post its highest such weekly candle close since mid-September.<\/p>\n

Data from Cointelegraph Markets Pro and TradingView shows the week to Nov. 6 being capped at $20,900 on Bitstamp.<\/p>\n

BTC\/USD 1-week candle chart (Bitstamp). Source: TradingView<\/em><\/figcaption><\/figure>\n

With that, Bitcoin defends its trading range and avoids any noticeable break of its current paradigm \u2014 lurching between $19,000 and $22,800 since August.<\/p>\n

While heading nearer the top of the range, the FTX news involving Binance appeared to dampen the mood significantly, ultimately costing Bitcoin the $21,000 mark.<\/p>\n

\u201cAs part of Binance\u2019s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT),\u201d Binance CEO, Changpeng Zhao (also known as \u201cCZ\u201d) wrote in a Twitter thread<\/a>. <\/p>\n

\u201cDue to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.\u201d<\/p><\/blockquote>\n

Zhao added that divesting itself of its FTX holdings would take Binance \u201ca few months,\u201d acknowledging that markets could be impacted throughout.<\/p>\n

In his own thread<\/a>, Sam Bankman-Fried, CEO of FTX, meanwhile referenced what he called \u201cunfounded rumors\u201d regarding liquidity issues.<\/p>\n

\u201cWe’re grateful to those who stay; and when this blows over we’ll welcome everyone else back,\u201d he wrote in one optimistic post to followers overnight.<\/p>\n

The market reaction has so far been less positive; a look at the top ten cryptocurrencies by market cap shows 24-hour losses on some tokens nearing 10% at the time of writing.<\/p>\n

For Bitcoin traders, it is time to take advantage of the retracement in a week they believe should result in further upside.<\/p>\n

\u201cLost lower time frame support. Nice little pullback. Will be looking to re-long when it finds it’s next support,\u201d popular trading account IncomeSharks wrote<\/a> in an update.<\/p>\n

A separate post focused on potential cross-crypto gains.<\/p>\n

\u201cTotal marketcap looking great on the daily. Bull or bear, I think there’s enough people still sitting on cash to push up to 1.5 trillion,\u201d it read<\/a>.<\/p>\n

Total crypto market cap 1-day candle chart. Source: TradingView<\/em><\/figcaption><\/figure>\n

Micha\u00ebl van de Poppe, founder and CEO of trading firm Eight, also said<\/a> that he would be looking for \u201cbuy the dip opportunities\u201d across crypto in the short term.<\/p>\n

A classic counter-perspective came from fellow trader Il Capo of Crypto, who argued that $21,500 will mark the high point in a downtrend set to continue.<\/p>\n

\u201cSeeing whales wanting to fill asks at 21500. A very quick scam pump to this level would be the perfect end of the party. ETH to 1700s,\u201d part of a tweet stated<\/a>.<\/p>\n

CPI and U.S. midterms in focus<\/h2>\n

The Federal Reserve dominated the last week of October when it came to crypto-asset performance thanks to its decision to raise interest rates by another 0.75%.<\/p>\n

As this is implemented, markets will be watching another key figure this week \u2014 Consumer Price Index (CPI) data for October.<\/p>\n

Estimates put year-on-year inflation at 7.9%, as per economists surveyed by Bloomberg, down 0.3% versus September.<\/p>\n

Any lower-than-expected CPI readout could be a boon for crypto and riskassets, as it notionally increases the chances of the Fed pulling back on rate hikes sooner.<\/p>\n

Before CPI and jobless claims, however, there is the issue of the U.S. midterm elections to deal with \u2014 a potential source of volatility in and of itself.<\/p>\n

\u201cPersonally, I am in no rush just yet to start buying,\u201d well-known social media personality @CryptoGodJohn told<\/a> followers. <\/p>\n

\u201cCZ vs SBF drama, Midterm elections Tuesday, CPI Thursday. This will be the biggest week of crypto that will set the tune for the end of the year.\u201d<\/p><\/blockquote>\n

The rate hike announcement was something of a fake tone-setter, having sparked volatility which canceled itself out within days.<\/p>\n

Fellow commentator Capital Hungry meanwhile warned<\/a> of the impact of stronger CPI inflation:<\/p>\n

\u201cIf US CPI this week is still high we are going to see that upside on gold reversed, USD strength back and Equities bears back in play.\u201d<\/p><\/blockquote>\n

The U.S. dollar index (DXY) was making up for lost ground at the time of writing, having seen a dramatic 2% daily decline on Nov. 4.<\/p>\n

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView<\/em><\/figcaption><\/figure>\n

Funding rates run hot<\/h2>\n

In a warning signal to bulls \u2014 and particularly late longs \u2014 Bitcoin funding rates are surging on derivatives exchanges.<\/p>\n

As noted by Maartunn, a contributor to on-chain analytics platform CryptoQuant, funding rates are now at their highs in six months.<\/p>\n

Funding rates are a mechanism used in perpetual contracts to keep their price close to the Bitcoin spot price. <\/p>\n

Highly positive funding rates suggest that the market expects BTC\/USD to go higher and traders are paying for the privilege to go increasingly long BTC.<\/p>\n

The effect can be detrimental, as a price decrease ends up liquidating large numbers of overly bullish positions.<\/p>\n

\u201cAnd at this moment, Funding Rates are very high. Traders are betting on higher prices and are willing to pay a serious amount of interest,\u201d Maartunn explained alongside CryptoQuant data. <\/p>\n

\u201cThat doesn’t have to be bearish perse, but when price start to move against them they might be forced to get out their position or it will be liquidated.\u201d<\/p><\/blockquote>\n

\"\"
Bitcoin funding rates annotated chart. Source: Maartunn\/ Twitter<\/em><\/figcaption><\/figure>\n

As Cointelegraph reported, last month saw record liquidations for 2022 as Bitcoin made its way to $21,000.<\/p>\n

Maartunn added that funding was \u201csomething to keep an eye on in the coming days.\u201d<\/p>\n

Miners miss out on difficulty readjustment<\/h2>\n

Bitcoin\u2019s network fundamentals remain in an interesting, if not wholly bullish state.<\/p>\n

The latest data from on-chain monitoring resource BTC.com confirms that network difficulty decreased by 0.2% on Nov. 7 \u2014 far less than previously estimated.<\/p>\n

Bitcoin network fundamentals overview (screenshot). Source: BTC.com<\/em><\/figcaption><\/figure>\n

The result has implications for miners, who have seen profits squeezed even as hash rate hits new all-time highs.<\/p>\n

A major difficulty decrease would have helped level the playing field for some, and its absence keeps up pressure on certain players.<\/p>\n

Even Bitcoin\u2019s largest public miners are \u201cunderperforming BTC heavily\u201d in the current environment, Sam Rule, market analyst at UTXO Management, revealed<\/a> last week. <\/p>\n

As Cointelegraph reported, the combination of high hash rate and low miner profitability is nonetheless a potential cause for classifying Bitcoin as undervalued.<\/p>\n

The Bitcoin Yardstick continues to edge further into its “cheap” zone this month, having seen rare lows.<\/p>\n

Bitcoin Yardstick chart. Source: Glassnode<\/em><\/figcaption><\/figure>\n

Sentiment gauge hits three-month high<\/h2>\n

It might not all be doom and gloom for crypto market sentiment.<\/p>\n

Related:\u00a0Buying Bitcoin \u2018will quickly vanish\u2019 when CBDCs launch \u2014 Arthur Hayes<\/em><\/strong><\/p>\n

According to the Crypto Fear & Greed Index, cold feet are getting shaken off in Bitcoin\u2019s run to its highest since September.<\/p>\n

Fear & Greed, which measures sentiment with a normalized score of 0-100 using a basket of factors and offers various labels \u2014 extreme greed, greed, neutral, fear and extreme fear \u2014 to categorize them, reached its highest since mid-August at the weekend.<\/p>\n

At 40\/100, the optimism proved unsustainable thanks to the market retracement into the new week, and as of Nov. 7, 33\/100 is in place \u2014 firmly within the \u201cfear\u201d bracket.<\/p>\n

Crypto Fear & Greed Index (screenshot). Source: Alternative.me<\/em><\/figcaption><\/figure>\n

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.\n<\/p>\n<\/div>\n