At press time, Bitcoin price is stable but is under tremendous selling pressure following the liquidation on August 27. Technically, a hint of weakness is evident.
However, this prediction will change if BTC bulls push prices above the immediate resistance at $66,000. This reaction point marks the August 23 highs, and a subsequent rise will confirm the August 8 uptrend.
Binance traders are pessimistic overall
Previously, traders were cautiously optimistic, acknowledging Bitcoin’s fragility and historical volatility. Despite the stabilization of spot prices, an analyst on X Notes that traders on Binance, the largest exchange by number of customers, are predominantly pessimistic.
According to the analyst, more traders are not placing short positions, which is an overall bearish development for the world’s most valuable coin. If more retail traders place bearish bets, the coin could collapse and confirm the losses seen on August 24.
The shift in sentiment in favor of sellers occurs when most traders are neutral towards the coin. According to the CMC Crypto Fear and Greed IndexTraders took a wait-and-see stance and are mostly neutral at the time of writing this article on August 28th.
This has been the prevailing sentiment since the price crash in early August, when most traders were desperate to get out, pushing sentiment to its most “fearful” territory since early September 2023. Looking at the sentiment chart, traders were only extremely greedy last year when Bitcoin rose to an all-time high, climbing to $73,800.
So, if prices are weak and sentiment is neutral, this could help bullish bulls, at least in the short term. A recovery above $63,000 that helps reverse the August 27 losses could further boost demand. This expansion could be the building block for even more gains beyond the August 2024 highs.
Why is the funding rate positive when BTC prices are falling?
Despite the optimism, the average funding rate on Binance, Bybit, and OKX is in positive territory at 0.002%, meaning short leverage traders are getting paid to hold their positions.
Typically, this means that perpetual bonds are trading at a premium to the spot price. This development could attract more sellers and reinforce the downtrend.
Typically, funding rates are positive when prices rise, indicating bullish sentiment. When prices fall, they become negative, meaning short sellers have to pay leverage to those betting on rising prices.
Featured image by Canva, chart by TradingView
