Bitcoin’s recent block reward halving has created a new wave of optimism among miners. The event will cut the block rewards in half for all miner on April 20, 2020. cryptocurrency market. Overall market indicators indicate a positive trend.
Kaiko’s analysts who are experts in crypto derivatives reported an increase in Bitcoin’s funding rate in the days leading upto the upcoming ICO. halving. Funding rate refers to a charge paid between holders of long and short positions in contracts for futures.
A negative rate indicates that the long position is compensating for short, and could indicate a bearish forecast. Bitcoin’s funding rates fell into the negative zone for the first times this year, on April 18, just two days prior to the halving.
Bitcoin Returns With New Bullishness
This short-lived negativity has been temporarily overshadowed, however, by an overall sense of optimism. Bitcoin’s funding rates recovered rapidly after the halving and are now positive at 0.0051. The market is now more optimistic, and long positions have been incentivized.
The funding rates of $BTC Perps have been negative since the end of 2023, just before the half-off. pic.twitter.com/MjiU4C1L5m
— Kaiko (@KaikoData) April 24, 2024
This positive outlook has been further reinforced by the increase in Bitcoin’s Open Interest, a metric which represents the entire amount of futures contract outstanding. OI is now over $17billion, after a drop last week. It indicates continued investor interest in the Bitcoin markets.
Bitcoin now trades at 64.250. Chart: TradingView
The impact of halving the impacts exceeds historical trends
Kaiko’s research suggests that the current halving may have a greater positive effect on Bitcoin than previous halvings.
Bitcoin’s price was 2.8% higher at the time the report was published, surpassing the increases in prices immediately following the events of 2012, 2016 and 2020. Bitcoin has remained nearly 3% in positive territory since the halving despite some minor price fluctuations.
Analysts warn against making definitive conclusions about this data. Cryptocurrency is a volatile market, so short-term fluctuations should be expected.
Experts point out historical patterns whereby price increases after a halving were usually followed by periods or consolidation or correction. It may take several months before the true impact of halving Bitcoin’s price trend on a long-term basis is fully apparent.
A Bullish Sentiment Driven by Macroeconomic factors
Analysts believe that more than just technical indicators, broader macroeconomic influences are also contributing factors to the current bullish sentiment around Bitcoin.
Global inflationary pressures, coupled with geopolitical uncertainty have pushed investors to assets they perceive as hedges. Bitcoin is an asset that fits the bill for many investors, as its limited supply and halving mechanism make it a hedge against inflation.
The increasing adoption by institutions of cryptocurrencies is also seen as positive for Bitcoin’s prospects on the long term. Major financial The institutions that are looking into ways to provide Bitcoin exposure for their customers indicate a level of growing confidence.
Chart from TradingView, Featured Image from Pexels
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