The double-digit growth of the Bitcoin price since mid-March may be short-lived due to macroeconomic uncertainty, as well as low trading activity in the market of the main cryptocurrency. Experts interviewed by Bloomberg believe that there are risks of the formation of a so-called bull trap, a situation where quotes falsely indicate further growth in the asset price, writes RBC Crypto.
“Investors need to be careful – the market remains fragile and easy to manipulate. Retail activity is low, volumes are small and even the so-called smart money is staying away. Players with a real opportunity to move the market are not doing so – and for good reason,” said Kirill Kretov, an expert on automated trading at CoinPanel.
A “bull trap” is a situation when the chart falsely indicates further growth in the asset price. Investors buy this asset in the hope of making money on the price growth, but subsequently its value, on the contrary, decreases. A “bull trap” usually occurs after growth to an important price level. “Smart Money” is a trading strategy based on the analysis of the actions of large players who manage significant capital flows.
On March 11, the price of Bitcoin fell to a four-month low of about $76.6 thousand, a level previously seen only on November 10. After which, by March 26 at 11:30 Moscow time, quotes had recovered to $88.1 thousand. The growth from the minimum on March 11 was about 15% with a local price peak on March 24 at $88.8 thousand.
Low rates
One indicator of cautious sentiment is the funding rate in the Bitcoin futures market, which reflects the difference in prices between the spot and futures markets.
In bull markets, futures prices are higher than spot prices, so the funding rate is positive. Although the price of Bitcoin has been rising in recent days, the aggregate funding rate is mostly in negative territory. For example, according to Coinalyze, this indicator did not fall into negative values from October 2024 to early February 2025, and the price of Bitcoin rose almost without a rebound from $60,000 to a maximum of about $110,000 in late January.
The funding rate (funding) is a periodic payment to traders who have open positions in perpetual futures. Funding is calculated by the exchange several times a day and helps prevent a significant deviation of the futures rate from the price of its underlying asset. The funding system on exchanges automatically writes off funds from some traders and credits them to others.
If the price of a perpetual futures contract is higher than the price of the underlying asset, funding is positive. In this case, the funding rate is charged to traders who have long positions and credited to traders who have short positions. If the price of a perpetual futures contract is lower than the price of the underlying asset, funding is negative, and the funding rate is charged to short traders and credited to long traders.
However, due to the fact that such rates change every few hours, depending on the conditions of a particular crypto exchange and the general state of the crypto market, this figure can change in a matter of minutes.
Another sign of the lack of confidence in the market is the cost of lending to stablecoins in the decentralized financial instruments sector. As a traditional measure of investors' risk appetite, lending rates on the largest lending platform in the crypto market, Aave, are used. Lending rates for stablecoins on Aave are in the range of 3.8-4%, which reflects investors' reluctance to take out loans, because unlike centralized services, rates on Aave are regulated by demand – the higher it is, the higher the rate, and vice versa. This situation is assessed by analysts as a decrease in investors' appetite for risky strategies. “On Aave, lending rates depend on the utilization rates of the deposited assets. As the appetite for leverage and other trading strategies that require lending decreases, rates on Aave fall,” said Strahinja Savic, Head of Data and Analytics at FRNT Financial. Loans without intermediaries. How Aave works, why the platform is popular
Market direction
According to Augustin Fan, a partner at cryptocurrency derivatives software provider SignalPlus, it is necessary to wait until the US trade tariffs, which are expected on April 2, to get clarity on the market direction.
“We expect markets to continue their smooth recovery through the end of the month, with the next major catalyst being the tariff announcement,” he said.
Kretov added that the impatience of investors who have now decided to take trading positions on the growth of Bitcoin in conditions of low liquidity could create conditions for a “bull trap” when the price sharply reverses after minor growth.
The instability of the price trend is also indicated by data from the analytical platform CryptoQuant, where “all market indicators indicate that Bitcoin will experience significant instability in the short and medium term.”
Источник: cryptocurrency.tech
