Bitcoin’s recent surge has left retail investors in the dust, as institutional money steps in with its investment, potentially paving the way for a slow but steady rally to the moon. But what’s behind this shift in market sentiment?
Chart of the Week: Bitcoin Soars, But ‘Wen Lambo’ Crowd Is Missing From the Rally
A Shift in Retail Sentiment: What’s Behind Bitcoin’s Recent Surge?
Bitcoin has reached an all-time high, with traders and investors taking notice. However, a key group – retail investors – remains on the sidelines.
Funding rates refer to the interest rates charged by lenders when borrowers draw on their credit lines.
These rates vary depending on market conditions and lender policies.
In general, funding rates are higher than base rates due to the risk involved in lending.
The average funding rate can range from 2% to 10% above the base rate, with some lenders charging as high as 20%.
Funding rates are typically expressed as a percentage of the outstanding balance or as an annual percentage rate (APR).
The Bitcoin long/short ratio is a metric used to gauge market sentiment and position sizing in the cryptocurrency market.
It measures the number of long positions (buying) against short positions (selling).
A high long/short ratio indicates bullish sentiment, while a low ratio suggests bearish sentiment.
According to various sources, the average long/short ratio for Bitcoin is around 2-3:1, with some periods reaching as high as 5:1 during bull runs.
Market Sentiment and Investor Behavior
Interest levels among retail investors have plummeted compared to 2021, when bitcoin was experiencing a significant bull run. The current market sentiment suggests a shift towards more sustainable trading practices, which could potentially pave the way for long-term gains.
The Rise of Institutional Money
In contrast to retail investors, institutional money has been fueling the recent rally. This suggests that big players are stepping in with their investment, which might be indicative of a slow but steady race to the moon rather than a reckless joyride.
Risk Appetite and Funding Rates
Risk-off sentiment is evident from funding rates, as traders become more cautious. The current funding rate is significantly lower than during the 2021 bull market. This trend indicates that traders are taking out their ‘super-modified’ vehicles for a weekend drive on the track – but also have their sensible sedans following along, just in case.
Short Positions and Volatility
The high number of short positions in the market is another indicator of risk-off sentiment. The bitcoin long/short ratio has reached its lowest point since the crypto winter in September 2022. This implies that most traders are not completely buying into this recent positive momentum and betting on bitcoin moving lower as a hedge.
A Sustainable Rally?
Given the current macro-risk, it’s understandable that investors are risk-averse. However, periods of low leverage and risk appetite have often preceded further sustainable gains. The bottom line is that big money is stepping in with their investment, which might start a slow but steady race to the moon rather than a reckless joyride.
Average Daily Funding Rate from 2021 to 2025
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| Date | Funding Rate |
|————|————–|
| 2021-01 | 185% |
| 2022-09 | N/A |
| 2025-present| Near 20% |
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Bitcoin Long/Short Ratio
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| Date | Long/Short Ratio |
|————|——————|
| 2021-01 | High |
| 2022-09 | N/A |
| 2025-present| Low |
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