3 reasons why traders turned bullish after Bitcoin price surged to $10.7K

3 reasons why traders turned bullish after Bitcoin price surged to $10.7K

Today the price of (BTC) abruptly rose by 6% from $10,136 to as high as $10,743.

After this powerful 24-hour rally, analysts are now turning cautiously bullish for various reasons but will Bitcoin price be able to tackle the $11K mark any time soon?

Currently, the factors that appear to be lifting investor sentiment are negative funding rates, BTC whale activity, and the U.S. dollar’s recent weakness.

At the moment, Bitcoin’s funding rate across various futures exchanges is either neutral or negative, despite the price hovering above $10,000.

Bitcoin futures exchanges utilize funding to ensure there is balance in the market and it disincentivizes the majority of the market to prevent the market from swaying to one side for a prolonged period.

If long contracts, or traders betting on a Bitcoin price increase represent the overwhelming majority, they will need to pay short contract holders. The opposite applies if short contract holders dominate the market.

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When the funding rate turns negative, it means the majority of the market is shorting BTC. Typically, when funding rates remain below zero, it causes a short squeeze and a surge in BTC price. It can also be an indication that the short bet is overcrowded, raising the likelihood of an upsurge.

A popular pseudonymous trader known as “DonAlt” tweeted that it is “weird” to see sentiment bearish with negative funding rates. He said:

The trader also noted that he sees an absorption of selling pressure at $10,000. He added:

The overcrowded Bitcoin market with short contracts coincides with some top whales possibly moving their holdings off exchange.

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According to Whalemap, a group of on-chain analysts who track whale activity, top buyers moved their BTC on Sept. 23.

The analysts said top buyers moving their funds have typically been a bullish catalyst for BTC. They explained:

As the number of COVID-19 cases surges in the U.S., lawmakers are locked in a stalemate over the future of a much needed stimulus package and this is leading strategists to speculate on a weakening U.S. dollar.

Before the initial rally, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said $10,700 to $10,800 is likely for Bitcoin.

The trader emphasized that if the dollar slows down, the $11,200 to $11,400 range could be a reasonable target. He wrote:

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