Bitcoin currently appears to be catching its breath after reaching a novel all-time high (ATH) above $109,000 earlier this week. So far, these assets have seen slightly reduced growth momentum, with the price hovering just above $104,000.

However, despite the slowdown in growth dynamics, Bitcoin’s recent performance has sparked renewed interest in the market. CryptoQuant analyst Burak Kesmeci recently shared information observations into Bitcoin price behavior and key market indicators, shedding lightweight on potential future moves.

In a recent post on CryptoQuant QuickTake, Kesmeci’s analysis focused on Binance Bitcoin Funding Ratios, an indicator that provides significant clues about market sentiment and dynamics.

By reviewing historical data from past bull cycles, he identified three distinct phases that can serve as a framework for interpreting the current market environment.

What’s next for Bitcoin based on funding rates?

According to Kesmeci, during the 2020-2021 bull market, Binance Bitcoin funding rates went through three distinct phases:

Phase 1 (July 2020): Funding rates held steady at 0.01 for weeks before demand spiked. This phase acted as the “calm before the storm”, driving Bitcoin from $9,000 to $12,000 as funding rates rose to 0.10.

Phase 2 (November 2020): After the initial raise in Bitcoin, there was a correction. Funding rates briefly turned negative before turning positive, supporting Bitcoin’s rise from $12,000 to $19,000.

Phase 3 (December 2020): As Bitcoin broke past its previous highs and breached the $60,000 mark, funding rates increased significantly, reflecting forceful market support.

Currently, Kesmeci notes that Binance Bitcoin funding rates remain at a base level of 0.01 – which is consistent with the early stages of a bull cycle. Analyst wrote:

Analyzing the latest data, I believe we have completed the first two phases of the bull cycle. In the third phase, I will be keeping a close eye on whether Binance Bitcoin’s funding rates exceed 0.01.

The analyst mentioned that a sustained raise above the 0.01 level will suggest increased activity in the futures market and may result in another significant upward move.

However, Kesmeci also cautions that elevated financing rates are often unsustainable and markets tend to correct through long squeeze events that rebalance.

Key indicators and divergences in the market

In a separate analysis, another CryptoQuant analyst TraderOasis examined several key metrics including the Coinbase Premium Index, open interest and funding rates. These indicators give a picture of the Bitcoin market health and potential direction.

TraderOasis highlighted the discrepancy between the Coinbase Premium Index and Bitcoin price movement. While the asset reached a novel high above $109,000, the Coinbase Premium Index made a lower high. This lack of adjustment has raised concerns about the sustainability of the current price trend.

Moreover, the discrepancy between open bid and price also suggested that the market may lack the solid foundations necessary for continued growth. According to TraderOasis, a robust uptrend requires tighter alignment of these indicators, which would signal high investor confidence and a stable market structure.

When analyzing funding rates, TraderOasis has recently observed bearish sentiment among traders. However, he noted that such conditions often precede pointed price movements.

The analysis suggests the possibility of an initial rally out of a bearish position followed by a pullback. If this pattern is realized, it could set the stage for a more sustainable, long-term uptrend.

Featured image created with DALL-E, chart from TradingView