After a brutal sell-off on Monday that wiped out over $8 billion in positions across crypto markets, Bitcoin (BTC) bounced 12.35% to $102.5K. A closer look at the funding rate explains the sharp recovery rally and why the outlook remains bullish for Bitcoin price.
Bitcoin Price Today: BTC up No data found for bitcoin on 12 minutes ago%, Trades at No data found for bitcoin on 12 minutes ago
Although Bitcoin price briefly recoverd above $100K on Monday, today BTC trades at No data found for bitcoin on 12 minutes ago. The 12.35% recovery rally on Monday has come undone. Does this mean the bullish recovery momentum has declined? Will this lead to a consolidation, or will BTC climb higher?
*bitcoin price updated as of No data found for bitcoin on 12 minutes ago
BTC is up No data found for bitcoin on 12 minutes ago% on February 4, but the funding rate hints at what Bitcoin price could do next.
Bitcoin’s Funding Rate Predicts Recovery Rally to Continue
The funding rate is a recurring fee collected from traders to maintain the price of a perpetual contract and the underlying asset’s spot price. A positive funding rate suggests a bullish sentiment, and negative funding indicates a bearish sentiment. If funding is positive, long positions pay short positions and vice versa.
The chart shows that the last few times the 24-hour funding rate flipped negative, BTC catalyzed a quick reversal. If history rhymes, the recent crash could also be undone, and the initial spike would be just a hint of what’s next.
BTC Funding Rate
While the recent recovery rally and funding rates are hinting at an optimistic future, let’s look at what Bitcoin price analysis is indicating
Bitcoin Price Analysis: What’s Next?
Despite the recent crash and more than $8 billion in liquidations, the bullish Bitcoin price trend remains intact. Although BTC briefly swept $92.5K, the recovery has led to a daily candlestick close above a key support level of $97.2K. So long as the bulls defend this level, investors can expect the uptrend to resume.
The next critical range extends from $101.4K to $105.5K, where Bitcoin price could face resistance. Escaping the $110K all-time high (ATH) could propel BTC to a new ATH of $123K. This new peak coincides with the 161.8% Fibonacci extension level of the 23% uptrend between January 13 and 20.
A similar fractal was seen with the 14% rally noted between November 14, 2024, and November 23, 2024. Extending this move showed Bitcoin forming an ATH at $108.3K, which coincided with the 161.8% Fibonacci level.
BTC/USDT 1-day chart
Key Levels to Buy BTC & Book Profits
As noted above, the next key hurdle ranges from $101.4K to $105.5K. Clearing this would open the path to revisiting the ATH at $110K. Bitcoin price prediction notes that clearing $110K could lead to a new ATH of $123K.
If Bitcoin price flips the critical support level of $97.2K, it could catalyze another leg down. In such a case, the strategic levels to buy dips include $92.5K, $89K and $85.8K. These levels have previously served as key support levels hence a bounce here is high probability.
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