Bitcoin Price Could Soon Drop 40 Percent, BitMEX Data Shows

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Mon, 11/18/2019 - 16:22
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    The Bitcoin price could be on track to print another ugly-looking red candle as Bitcoin funding rates fail to budge for eight days in a row

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Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

Bitcoin could soon witness another major price move in either direction. According to crypto analyst "Rptr45," the funding rate on the BitMEX exchange has been in the 0.01 percent / 0.03 percent range for the past eight days, the longest streak since October 2018. 

The Bitcoin price tanked by more than 40 percent just one month after that eight-day period. If history is any guide, this scenario could very likely repeat in 2019.  

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Bitcoin funding rates on BitMEX, explained

BitMEX, the leading crypto derivatives exchange, charges its accounts with funding rates every eight hours. The size of these rates depends on the demand and supply of XBT/USD. Traders are supposed to pay a funding fee based on their market position.

For example, those who are long on Bitcoin will have to pay a funding fee of 0.01% (or vice versa if the funding rate is negative). It has been proven that traders do not tend to close their positions to avoid paying more fees. 

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This time it might be different

That said, the funding rate on BitMEX might not be a reliable indicator for predicting Bitcoin's future price action. Despite still boasting gargantuan trading volumes, BitMEX is not as influential in the crypto industry as it was at the end of 2019. 

Moreover, according to crypto researcher Daniel Stasek, the size of the funding rate might continue to decline since there would be no need for BitMEX to equalize the supply/demand ratio due to the asset's declining volatility.     

As reported by U.Today, trading volumes recently plunged on BitMEX, Coinbase and other top-tier cryptocurrency exchanges, which is yet another sign of an imminent Bitcoin price move. 

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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