Bitcoin has experienced extremely strong price action over recent days. At the highs of the rally on Monday, the leading cryptocurrency traded as high as $11,500 on leading margin exchanges.
There remain signs that BTC could undergo a strong retracement after surging as high as $11,500. This comes in spite of the fact that BTC is already down by approximately $700 from the local highs as of this article’s writing.
The following are three signs that BTC could retrace as shared by analysts.
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#1: A Potentially Overextended Bitcoin Futures Market
What some analysts see as the most tell-tale sign that Bitcoin could drop from here is the state of BTC futures.
Below is a chart from a cryptocurrency trader who predicted BTC would hit the $3,000s months before it did.
It shows that long positions on BitMEX have built up massive positions over the past week, resulting in a spike in the funding rate.
The funding rate is the rate that long positions pay short positions to normalize the price of futures to the spot price.
Chart from trader il Capo of Crypto (@CryptoCapo_ on Twitter)
The extremely high funding rates and positive long-short delta suggests that Bitcoin buyers may be overleveraged. Data from another source, which aggregates the funding rates of the top crypto futures platforms, also indicates this.
High funding rates are often seen at market tops, or at least at points in Bitcoin uptrends where the price slightly retraces.
#2: A CME Futures Gap In the High-$9,000s
Due to Bitcoin rallying on the weekend, it has formed a CME futures gap in the $9,600-9,900 range.
Analysis has found that 77% of all CME Bitcoin gaps fill within the week after they are formed. With this gap where it is, there