As Bitcoin (BTC) fast approaches its scheduled third halving, several metrics are now pointing toward positive market sentiment going into this most-anticipated event.

The perpetual funding rate turns to positive territory, suggesting a positive market place sentiment

The perpetual funding rate serves equally a useful indicator to gauge overall marketplace sentiment. When the rate is positive, long positions periodically pay short positions and vice versa. Funding rates also tend to correlate with market sentiment, meaning that when the market is strongly bullish or bearish, funding rates tend to exist positive or negative, respectively.

Bitcoin perpetual funding rate

The perpetual funding charge per unit turned extremely negative during the Black Thursday market crash and crept back up to near-positive territory following the market crash, but information technology faced difficulty breaking to the positive side. The funding rate has weakly broken to the positive side during the start week of May while the Bitcoin network is gearing toward the third halving.

Put–call ratio as a contrarian indicator

Traders are consistently buying put options, every bit indicated by the put–call ratio ascent since the market crash in mid-March and reaching a 3-month high. Mostly speaking, a rising put–call ratio indicates bearish sentiment in the options market. Yet, I agree the same perspective as Matt D'Souza, a hedge fund director at Blockchain Opportunity Fund, which is that a constantly rising put–call ratio could be interpreted as a bullish indicator, thus acting as a contrarian view that traders are bullish for Bitcoin'southward price and are property Bitcoin and buying put options as hedges and insurances rather than speculation. Every bit D'Souza said:

"A rising put to call means many investors are buying downside protection. I love it as a contrarian indicator. And so when put/call gets extreme or greater than usual, I really get bullish because I take a contrarian position. I like to exercise the opposite of the herd. This is near importantly, accept the other side for the most function when the ratios go too far in either management."

Bitcoin put/call ratio

The Bitcoin options flows tin can likewise confirm the belief that traders are buying options for the purpose of hedging, as in that location are more put buyers than put sellers in volume. If there is meaning volume on the sell side, it reflects market place participants' business concern well-nigh a potential market downturn.

Bitcoin option flows (DBT, OKX)

Spent Output Profit Ratio has turned positive

The Spent Output Profit Ratio, or SOPR, has cleaved and stayed in a higher place 1 every bit the market recovers from the Black Thursday crash.

During March and April, values of SOPR to a higher place 1 were rejected, indicating a micro comport marketplace. However, every bit the market approaches the May Bitcoin halving, we have seen SOPR values from the last week of April pause ane and reject going beneath 1.

Spent output profit ratio (SOPR)

People, in general, are much more comfortable selling when they are in turn a profit. When the market sentiment turns positive, people are reluctant to sell at a loss, thus an SOPR below 1 is rejected.

Terminal thoughts

As the world is fighting off the COVID-19 pandemic, it is also worth because this global situation. We believe there is nonetheless meaning marketplace doubt ahead, particularly going into the halving, which has coupled with that dubiousness.

The market place information points toward a positive merely relatively weak sentiment, possibly indicating the market is cautiously optimistic about the electric current market structure.

The views, thoughts and opinions expressed here are the author's alone and exercise non necessarily reflect or correspond the views and opinions of Cointelegraph.

Johnson Xu is a devoted fintech professional with a background in finance and reckoner science and with substantial exposure to the cryptocurrency/blockchain manufacture. He is currently the chief analyst and leads research initiatives at TokenInsight, a visitor that provides investment enquiry, ratings, data analysis, industry insights, investment management services, industry consulting, etc. His previous feel includes a global, top-tier cryptocurrency commutation and a Fortune 200 consulting company.