This is the key level to relaunch the Bitcoin rally

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The price of Bitcoin has shown low volatility lately. Its price trades in a narrow range, below $ 36,000. While the dominant cryptocurrency is much higher than it was around this time last year, it is down more than 40% since its peak in April.

The price of Bitcoin continues to be in a small range, unable to find a clear direction.

AFP via Getty Images

The key level that the price of Bitcoin must exceed is $ 38,000. Above that, the rally would likely be restarted, especially at a time when the futures market is not crowded.

Many traders in the cryptocurrency space watch the daily Bitcoin price chart.

If the price of Bitcoin exceeds $ 38,000, it will come out of crucial technical formation, as seen below in a chart shared by pseudonymous trader TeddyCleps.

The daily Bitcoin price chart.

Teddy Bear

But, the problem is that Bitcoin is constantly trading in a small range, unable to break up or correct down.

How would Bitcoin exceed $ 38,000?

There are two factors that could push Bitcoin higher, above $ 38,000.

The first is the background signal of the minor’s surrender. Recently, the Bitcoin hash rate has dropped due to increasing pressure from China on the local mining sector.

Historically, every time the hash rate dropped sharply, it would bottom out, as it made many miners capitulate.

The second is the constant selling pressure from the futures market.

On major exchanges, Bitcoin’s term funding rate has often been negative in recent weeks.

This means that many traders in the crypto derivatives market are short selling or selling Bitcoin, instead of buying.

When the selling pressure becomes too intense, it opens up the possibility of a short squeeze.

In the Bitcoin futures market, there is a mechanism called the funding rate. The exchanges use this mechanism to reward the minority of the market.

For example, if there are more buyers in the market, the term finance rate should generally exceed 0.01%. This means that buyers have to reward sellers with 0.01% of their position every eight hours, and vice versa.

In recent weeks, the Bitcoin futures funding rate on major exchanges has hovered around -0.01%.

Since this type of market prompts buyers, it could increase the likelihood of a short squeeze, especially when faced with a strong fundamental catalyst.

Still, economists and analysts are worried about the crypto market. Namely, negativity around stablecoins and mining persists in media circles.

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