Earlier this week, Bitcoin topped out at $11,500 — a historically important price point. The leading cryptocurrency proceeded to drop by approximately 7% to $10,600 in the 24 hours that followed the high.
After consolidating between $10,800-11,200, Bitcoin is breaking higher once again. Just minutes ago, BTC pierced $11,400 for the first time since the aforementioned highs.
Chart of BTC's price action over the past few days from TradingView.com
While some are fearing a similar rejection to the one Bitcoin faced earlier this week, derivatives data shows that BTC is now in a healthier position. This means that BTC may be able to move above $11,500 for the first time in approximately a year.
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Bitcoin Derivatives “Healthier” Than Last Time BTC Hit $11,500
When Bitcoin was rallying earlier this week, a problem that many analysts discussed was the high rates of funding Bitcoin futures owners were paying. Funding is the rate that long positions pay short positions in a perpetual swap market to normalize the price of the contract to the price of the underlying contract.
High rates of funding indicate that buyers of a perpetual swap are overextended compared to bears. High rates of funding are often seen before the price of the contract correct, just as Bitcoin did on Monday and Tuesday.
But things have changed since Monday and Tuesday. According to a funding rates dashboard shared by a trader, funding rates are now normalizing towards base levels around 0.01% every eight hours.
Table of BTC's funding rates across top perpetual swap futures markets. Data shared by Byzantine General (@Byzgeneral on Twitter).
Most perpetual swap markets, like those on Binance and BitMEX and ByBit, have reached levels suggesting buyers are only slightly outweighing bears.
This indicates that Bitcoin has room to move higher.
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$12,000 Imminent?
As long as Bitcoin moves above $11,400 and $11,500, analysts think that a move to $12,000 is imminent.
Kelvin Koh, a partner at The Spartan Group and former partner at Goldman Sachs, wrote on July 31st:
“If $BTC breaks the resistance at $11.4K, we are going above $12K in no time. Will take the wind out of alts again short term.”
This has been echoed by other analysts. As reported by NewsBTC, the same trader that predicted Bitcoin would bottom at $3,200 in 2018 said:
“$btc consolidating above a pretty key breakout level. price contracting, volume declining, seems bullish, continuation soon.”
He thinks that BTC will soon hit $12,000.
Related Reading: On-Chain Metric Signals the BTC Market Isn’t Overheated: Why This Is Bullish
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com As BTC Pushes $11,500 Top, Funding Rates Drop: Why This Is Bullish
