Key Takeaways
- Bitcoin funding rate at its lowest level since 2023
- Median increase rate after 90 days is approximately 30% after drop in hash rate
Current Upward Phase Similar to Past Structure
On the May 25, U.S. asset management firm VanEck released a mid-April report on the “Bitcoin Chain Check” by Matthew Sigel, the head of digital asset research, and other staff. The report points to two bullish signals. On-chain data also shows movement similar to past price rallies.
Bitcoin’s 7-day average funding rate fell to -1.8%, marking its lowest level since 2023. According to VanEck’s analysis, the average 30-day return during the negative funding rate phase since 2020 has climbed by 11.5%, which is higher than the average growth of 4.5% over the entire period. Also, the hit rate has reached 77%.
What Is the Funding Rate
Funding rates are fees paid regularly to balance long and short positions in cryptocurrency perpetual futures trading. These are positive in a bull market with plenty of buying and negative in a bear market where selling is predominant. These rates are currently in negative territory, indicating overselling.
Hash Rate Movement
In 30 days, the hash rate has dropped to the 16th percentile, the highest number of instances since the 2021 ban on Chinese mining. In six of the last seven significant declines, the price has risen after 90 days, with a median rise of 37.7%.
For on-chain activity, daily transactions increased by 22% month-on-month to 545,000, reaching the 96th percentile, while daily active addresses decreased by 3%. Meanwhile, the average fee decreased by 66% year-on-year, showing a gap in the quantity and quality of the usage of the network.
Bitcoin rose more than 13% in April, marking its first monthly performance in almost a year. Bitcoin has steadied in the $77,000 range.
