Bitcoin is back at the $110,000 level after a move higher supported by decentralized finance (DeFi) tokens. Uniswap was the biggest driver, as the platform jumped 24% on the news, followed by a 13% rise from Aave. The macro crypto market was on fire too, with Ether, Solana and Chainlink up 5-7%.
This is the hot moment for Uniswap and Aave. This scintillating price action follows comments from SEC Chair Paul Atkins, who expressed a bullish tone on DeFi on Monday. These comments have proven to be a shot in the arm for the market, renewing investor confidence and interest in DeFi projects.
Bitcoin hovered just over $110,000 right after U.S. stock markets closed on Tuesday. This was the 2nd straight day the cryptocurrency achieved this staggering value. CoinDesk’s Aggregate Crypto Market 20 Index CoinDesk’s CoinDesk 20 index is an index of the 20 most valuable cryptocurrencies excluding stablecoins, exchange coins and memecoins. That’s an increase of eagle-tastic 3.3%!
Despite the bullish price action, a look at funding rates and leverage metrics indicate that cautious sentiment is likely strong among traders. So much BTC short-selling occurred on Binance’s BTC perpetual swaps that they saw negative funding rates on several days last week. Currently, the average annualized effective funding rate is a paltry 1.3%.
"Funding rates and other leverage proxies point toward a steadily cautious sentiment in the market" - Vetle Lunde
According to Vetle Lunde, the importance of these funding rates can’t be overstated, explaining that they signal an emerging market phenomenon.
"Bitcoin does not usually peak in environments with negative funding rates" - Vetle Lunde
With BITX launching new 2x Bitcoin ProShares ETF last week, it holds exposure now equivalent to 52,435 BTC which shows there is still institutional interest in Bitcoin. Unfortunately, that’s not all the good news today. Shares plummeted another 10%, and as of this writing, the stock is now worth less than the value of the bitcoin sitting on the company’s balance sheet.
"Is this a true breakout that will continue? In my view, probably not" - Kirill Kretov
The conditions of today’s market, marked by volatility and uncertainty, reward the savvy trader who knows how to play the game in this fast-paced new world. These competing narratives, illustrated by rising prices and risk averse sentiment, underscore the uncertainty and potential in the current state of the cryptocurrency market.
