Bitcoin Funding Rates Plummet to 2023 Lows, Hinting at Market Bottom

The funding rates for Bitcoin have dropped to their lowest levels since 2023, a phenomenon that has traditionally been associated with market bottoms, as the cryptocurrency continues to surge past $75,000. According to data from Glassnode, the seven-day moving average of funding rates has declined to around -0.005%. Funding rates represent the periodic payments made between long and short traders in perpetual futures contracts, which help maintain price alignment with the underlying spot market. A positive funding rate indicates that long traders are paying short traders, signifying a bullish trend, whereas a negative rate suggests that shorts are paying longs, pointing to a market biased towards downside bets. Despite the prolonged period of negative funding rates in March and April, bitcoin has continued to climb, rising from the low to mid $60,000s to approximately $75,000. Historically, extremely 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-induced 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 recently, episodes such as the yen carry trade unwind in August 2024 and the April 2025 'Liberation Day' selloff have also seen negative funding rates align with local lows. The persistence of negative funding rates implies that bearish positioning remains high, even as prices trend upward, suggesting that the market may be experiencing a 'wall of worry,' where short positioning could potentially fuel further gains.