Will Bitcoin slow down anytime soon?

We are concerned that OI is still high whilst Funding has dramatically ramped up. Longs are beginning to look overweight.

TLDR

• Bitcoin is in a bullish structure, forming a bull flag with a breakout target at $45,600.
• Open Interest is high, and funding has significantly increased, raising concerns about long positions being overweight.
• Labour market data, including Unemployment Rate and Non-Farm Payrolls, could impact risk assets. A significant rise in unemployment may lead to a sell-off.

Disclaimer: Not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results. “One Glance” by Cryptonary sometimes uses the RR trading tool to help you quickly understand our analysis. They are not signals, and they are not financial advice.

Macro analysis

Today, we have labour market data out. The expectation is for the Unemployment Rate to stay at 3.9% and the Non-Farm Payrolls to come in at 183k. 

If there is a meaningful rise in Unemployment and a significant decrease in Non-Farm Payrolls, risk assets would likely sell off slightly. 

Technical analysis

• BTC is currently forming a bull flag with a breakout target of $45,600.
• The local support to the downside is $42,300.
• The RSI is very overbought on all major timeframes. We expect this to reset at some point, so we would be cautious to add new positions. 
• We would look to add new positions on a more meaningful retrace. $38k is the area of interest for DCA’ing again.  

Market mechanics

• The Open Interest has moved down very slightly but remains close to its yearly highs put in just a few days ago. 
• The OI-Weighted Funding Rate has ramped quite significantly overnight and into this morning. The OI-Weighted Funding Rate now sits at just north of 0.03%. This indicates there is a significant bias to be Long, and Longs are beginning to look overweight here.  

Cryptonary’s take

Bitcoin has a bullish TA setup; however, the mechanics are beginning to look overheated, with Funding running at very positive levels. The likely result will be that Longs will need to be flushed out.

Since the move up from $26k in mid-October, BTC has only had a couple of 10% pullbacks; we feel BTC needs a more substantial pullback to flush out the excess leverage. However, it is hard to predict when the flush-out will come. 

We’re not looking to chase this move, and we will wait for a more meaningful pullback to begin DCA’ing into BTC again. We’re also putting off Longing this bull flag simply due to Funding being as positive as it is - Longs are beginning to look offside, and likely need a flush out.