Bitcoin Sees Most Negative Funding Rates Since 2023, Hinting at Market Bottom

The funding rates for Bitcoin have dropped to their lowest levels since 2023, a phenomenon that has typically signaled a market bottom. As bitcoin continues to rise towards $75,000, the seven-day moving average of funding rates has fallen to approximately -0.005%, according to data from Glassnode. Funding rates represent the periodic payments between long and short traders in perpetual futures contracts, aiming to keep prices aligned with the spot market. A positive rate indicates long traders paying short traders, reflecting a bullish stance, while a negative rate suggests the opposite, with shorts paying longs, signifying a market biased towards downside bets. Despite the prolonged period of negative funding rates in March and April, bitcoin has consistently climbed higher, from the low to mid $60,000 range to around $75,000. Historically, deeply negative funding rates have often coincided with local price bottoms in bitcoin, typically resulting from crowded short positioning that can lead to a squeeze higher as bearish bets are unwound. This pattern has been observed across multiple market cycles, including the COVID-19 market crash in March 2020, China's mining ban in mid-2021, the FTX collapse in November 2022, and the Silicon Valley Bank crisis in 2023. More recent episodes, such as the yen carry trade unwind in August 2024 and the April 2025 'Liberation Day' selloff, also saw negative funding rates align with local lows. The persistence of negative funding rates suggests elevated bearish positioning, even as prices trend higher, indicating the market may be experiencing a 'wall of worry,' with short positioning potentially fueling further upside.