These Four Key Bitcoin Price Metrics Reflect Traders' Bullish Optimism

Photo: Coin Telegraph

(Coin Telegraph) - As Bitcoin's price tested the $17,580 low on Dec 11, investors remained relatively calm despite some analysts issuing bearish estimates. Last week’s trading may have finished at the same level where it started, but the fundamentals for Bitcoin have become even stronger.

BTC/USD 4-hour chart. Source: Trading View

Each time Bitcoin makes a new high, investors expect some form of correction. Despite failing to break through the $24,000 resistance, the price quickly bounced from its sub- $22,000 dip on Dec 21.

This event might have given sellers some hope, but looking under the hood, there is not a single sign of weakness sign. In the past week, Bitcoin outperformed the top-15 altcoins, which climbed 7.7% on average.

More importantly, the volume from altcoins has been disappointing compared to Bitcoin's 50% increase. This indicator strengthens the recent dominance performance, as does Bitcoin establishing $22,500 as a new support.

Institutional investors accumulate while Bitcoin price consolidates

Crypto fund manager Grayscale Investments also continued to aggressively add Bitcoin to their portfolio which now contains $13.3 billion in Bitcoin.

Over the past week, 11,620 BTC were added, totaling 576,650 BTC. Therefore, it was another excellent week for Grayscale Bitcoin Trust. Similar excitement can be seen by analyzing the fund's premium over the effective BTC held by each share, which currently sits at 0.00095064 BTC.

Perpetual futures funding is holding steady

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Funding rates ensure there are no exchange risk imbalances. Even though both buyers and sellers' open interest is matched at all times, the leverage can vary.

When buyers (longs) are the ones demanding more leverage, the funding rate turns positive. Therefore, the buyers will be the ones paying up the fees. This issue holds especially true during bull runs, when there is usually more demand for longs.

Sustainable rates above 2% per week translate to extreme optimism. This level is acceptable during market rallies but problematic if the Bitcoin price is sideways or in a downtrend.

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