The world's most dominant cryptocurrency is no longer reaching $40,000, but indicators suggest that bulls may experience few short-term losses to strengthen their next run at key resistance levels. The past few months have been very bad for BTC bulls as frequent commentary on the gradual decline in interest rates has affected the asset's price action.
The asset's relative strength index is plummeting and hovering in oversold territory. As a result, the bitcoin price could break the $38,000 barrier to confirm a weekly close of around $40,000. The asset has not been affected recently despite a large number of option expirations.
Can we expect a short-term rebound in bitcoin price action?
Cryptocurrency maximizers and analysts generally agree that funding rates are the best indicator of bitcoin price movement. Furthermore, Glassnode reports that funding rates were negative throughout January. In particular, the recent funding rate cycle was the longest since May-July 2021.
Furthermore, we can clearly observe from the chart above that the flagship asset always shows a nice bullish divergence after each cycle whenever the funds rate is trading negative. As a result, there have been a large number of price forecasts in the market predicting a short-term rally in Bitcoin to $40,000.
Santiment's report further highlights that Bitcoin's on-chain activity has entered an encouraging phase. While the asset continues to hover at $37.2k, liquidity is at its highest level since November and address activity continues to rise to new levels.
Overall, bitcoin longs placed heavy bets between $40,000 and $44,000, based on Friday's options expiration open interest. Meanwhile, $430 million of buying (calls) dominated $300 million of selling (puts) instruments. Overall, the asset is on track to reach $40,000 by the end of the week.