Negative Bitcoin funding rates could be bullish: analyst

The Aug. 5 market plunge reversed Bitcoin’s funding rate for margin positions, potentially setting the stage for a bullish fourth quarter.

As a result, short sellers dominated leveraged positions. According to the CryptoQuant researcher, investors could view the development as a net positive “as it suggests the future markets are no longer overheated.”

Investors adding BTC to their coffers is usually bullish for the largest cryptocurrency and signals strong market sentiment adopted by long-term investors, especially when funding rates have declined and created more room for upside momentum.

Bitcoin could range lower before an uptick

The assertion agrees with historical data showing that Bitcoin typically struggles in August and September. Gains achieved in July were wiped out by macro-driven market fear, but the year’s fourth quarter may bring relief for BTC.

Before global markets retraced, investors and markets widely expected Federal Reserve rate cuts in September. A dovish outcome at the Federal Open Market Committee meeting next month could direct much-needed liquidity into the crypto market and propel prices.