On Tuesday, Bitcoin continued to rise, nearing the $58,000 mark as the cryptocurrency market recovers from last week's sharp sell-off.
Market Reaction to Presidential Debates
While digital assets are unlikely to be mentioned in the US presidential debate between Donald Trump and Kamala Harris, the two parties' contrasting policies towards cryptocurrencies could influence market sentiment and potentially affect prices as the election approaches. Aurélie Barthere, chief research analyst at Nansen, noted that ongoing uncertainty surrounding the election could weigh on crypto prices into November.
K33 Research Analysis
Meanwhile, analysts at K33 Research suggested that Bitcoin and the broader market could be poised for a significant rally. They pointed out that the 30-day average funding rate for perpetual swaps has turned negative, a situation that has only occurred six times since 2018. According to the report, monthly negative funding rates have historically coincided with a market bottom.
Historical Data and Future Prospects
According to the report, historically, when funding rates have turned negative, Bitcoin has returned an average of 79% over the following 90 days, with the median 90-day return being 55%. In addition, open interest in crypto derivatives has steadily risen to its highest point since late July amid an influx of short positions. This dynamic, combined with negative funding rates, suggests that the market is increasingly vulnerable to a short squeeze, which could push prices higher.
Experts indicate potential further strengthening of Bitcoin prices despite current market fluctuations and uncertainties surrounding the US elections.
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