InvestAnswers Looks Into Reasons Behind The Latest Bitcoin (BTC) Bounce
A prominent crypto analyst and the host of InvestAnswers is looking reasons behind Bitcoin’s (BTC) latest bounce out of sideways price action.
In a recent video update, YouTube channel InvestAnswers draws plausible scenarios from the geopolitical to the technical analysis to explain BTC’s latest behavior.
“Risk-on is back. Certain names that are really beaten down are back.
Not only the lack of trust around the world in fiat regimes but also risk-on. But this is what I believe is the real reason – the perpetual funding rate.”
Crypto investors sometimes take leveraged positions in futures contracts that will never expire, but require periodic payments. The crypto expert looks into how funding rates impacted Bitcoin’s latest rally,
“There was a massive negative funding rate. This can lead to a short squeeze. When the rate is positive, long positions pay short positions. Conversely, when the rate is negative, short positions pay long positions.
When it’s very negative it’s very concerning. It tells me that all the shorts are going in hard and they’re investing in a lot of puts.
But I think the short side got squeezed hard in a massive short squeeze.”
He also notes that the ongoing conflict between Russian and Ukraine could have played a role to the major Bitcoin buy-in.
“All it takes is a little buy to trigger this, and maybe that $254 million that came out of a place like Russia, the Eurozone, and Ukraine, maybe that’s all it took to create that short squeeze and make it happen.”
While the analyst disagrees with traditional media’s logic of what caused BTC to rise, he thinks that Bitcoin’s negative perpetual funding rates, had already paved path for a possible squeeze, and the subsequent military conflict then forced traders’ hands.
“This is what I believe happened. All the mainstream media is incorrect. We’ve done the numbers and we think this is triggered by the initial… The lighter that lit the fuse was the initial money out of Ukraine, Russia, oligarchs in London.
But the reason was the perpetual funding rate was so negative and that caused a massive short squeeze.”
At the time of writing, BTC is trading at $43,850.
