Bitcoin futures markets signal ‘prime buying’ opportunity soon

Record-long positive Bitcoin futures funding rates signal “strong bullish sentiment” which can often precede price corrections, says on-chain analytics firm CryptoQuant.

Bitcoin futures funding rates — periodic payments made between short and long traders — may be signaling a potential price correction for Bitcoin in the future, which could present prime buying opportunities, according to market analysts.

In a post shared on X on April 3, an analyst from on-chain analytics firm CryptoQuant reported that record-long positive Bitcoin futures funding rates are signalling “strong bullish sentiment.”

Futures funding rates are the periodic payments that traders pay each other based on the difference between the price of the perpetual futures contract and the spot price of BTC.

If the Bitcoin futures prices trade above the spot prices, longs pay shorts the funding rate. Conversely, if the futures price trades below the spot, shorts pay longs the funding rate.

Bitcoin funding rates. Source: Crypto Quant

However, “historically, such optimism precedes price corrections,” said analyst Crypto SunMoon,' before adding:

“A subsequent drop may offer a prime buying opportunity.”

CryptoQuant analyst ‘Maartunn’ also observed a rising Coinbase Premium, which he said was “a sign of U.S. institutions actively buying Bitcoin.” This premium is the price difference between Coinbase compared to global exchanges.

Earlier this week, crypto derivatives tooling provider Greeks Live said that Bitcoins continued decline was “driving the crypto market down significantly, with panic spreading across the market and futures premium levels falling.”

BTC has fallen around 9% over the past week, hitting a low just below $65,000 on April 2. It currently stands 10.5% below its March 14 all-time high of $73,738 and it could drop further, according to IG market analyst Tony Sycamore.

In an April 4 post on X, the analyst predicted a drop to support at around $60,000, or possibly lower.

“Tuesdays sell-off increases the likelihood that BTC is undertaking another leg lower (into support at $60/58k) to complete a three-wave correction from the $73,794 high before the uptrend toward $80,000 resumes.”

BTC/USD with 200-day SMA. Source: Tony Sycamore

Analyst and trader ‘Moustache’ told his 112,000 followers on X “Its completely normal that we see some correction around the ATH of BTC.”

It was the same in 2020, he said before adding, “After that, the ATH was broken with force and a legendary bull run continued.”

BTC pulled back around 17% dropping to around $61,500 a week after its all-time high, it then recovered to reclaim $71,500 in late March, before retreating again in April.