Bitcoin Funding Rates Reach Most Negative Level Since 2023, Indicating Possible Market Bottom

The funding rates for Bitcoin have dropped to their lowest level since 2023, a signal that has historically been associated with market bottoms, as the price of Bitcoin continues to push past $75,000. According to data from Glassnode, the seven-day moving average of funding rates has fallen to around -0.005%. Funding rates represent the periodic payments made between long and short traders in perpetual futures contracts, which help keep prices in line with the underlying spot market. A positive funding rate indicates that long traders are paying short traders, reflecting a bullish market sentiment, while a negative rate suggests that shorts are paying longs, indicating a market bias towards downside bets. Despite the sustained period of negative funding rates throughout March and April, the price of Bitcoin has continued to rise, climbing from the low to mid $60,000s to around $75,000. Historically, deeply negative funding rates have often coincided with local price bottoms, typically reflecting crowded short positioning that can create the conditions for a price squeeze as bearish bets are unwound. This pattern has been observed across multiple market cycles, including the COVID-19 induced market crash in March 2020, the Chinese 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 price lows. The persistence of negative funding rates suggests that bearish positioning remains high, even as the price continues to trend higher, indicating that the market may be experiencing a 'wall of worry', with short positioning potentially fueling further price increases.