Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
As Bitcoin approaches the highly anticipated Bitcoin halving, a new research report by 10x Research identified a hidden factor that could derail the pre-halving hype and send Bitcoin (CRYPTO: BTC) prices plummeting.
What Happened: The report from 10x Research authored by analyst Markus Thielen argues that recent trends in Bitcoin’s funding rate have become a cause for concern.
The funding rate is a fee paid between perpetual swap holders based on the difference between the perpetual swap price and the spot price of Bitcoin.
A negative funding rate suggests that more traders are holding short positions and thus, betting on a price decrease.
“This shift in sentiment,” writes Thielen, “indicates a potential reversal in the market. While Bitcoin may have been reacting favorably to earlier news, the funding rate suggests a growing number of investors anticipating a price drop.”
Why Macro Suddenly Matters
Thielen’s report highlights a crucial shift in Bitcoin’s price drivers.
While the upcoming halving and ETF inflows previously dominated market narratives, macroeconomic factors, particularly inflation data, are now playing a more significant role.
The report cites historical examples where higher-than-expected inflation data triggered Bitcoin price corrections.
In March, two such instances caused a 15% price drop. While subsequent reassurances from the Federal Reserve initially soothed investor concerns, recent inflation figures remain stubbornly high.
Also Read: Bitcoin Halving: Will Institutions And ‘Smart Money’ Upend Past Price Rallies?
What Technical Analysis Says About Bitcoin
10x Research also points to a technical indicator — a Bitcoin price formation known as a triangle. In a bullish market, triangles often break upwards.
However, there’s always a chance of a downward breakout.
“Should Bitcoin break below the triangle’s support level established around $68,000,” says Thielen, “we could potentially see a price drop equivalent to the triangle’s height, which translates to a decline towards $55,000.”
The report also identifies $52,000 as a critical Fibonacci retracement level. Fibonacci retracements are technical analysis tools used to identify potential support and resistance zones.
If the $60,000 support level gives way, a further drop to $52,000 becomes a possibility.
What’s Next: With the May 1 FOMC meeting looming and inflation data remaining a key variable, the coming weeks could be a period of heightened volatility for Bitcoin.
Investors seeking to navigate these uncertainties and gain insights into the evolving economic and technical landscape are encouraged to attend Benzinga’s Future of Digital Assets conference on Nov. 19.
Read Next: Bitcoin Price May Drop After Halving Despite Miner Shakeup: JPMorgan
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