The bitcoin price has surged roughly 14% this month, marking its best monthly performance in a year, with many anticipating it will soon surpass $80,000, a level not seen since January. However, the perpetual futures market, typically in sync with spot price action, is behaving differently.
The funding rate, which indicates the market's sentiment, is currently below zero. According to 10x Research's Founder Markus Thielen, this divergence is driven by hedging activity from institutions, representing a structural change in the market due to the increasing participation of sophisticated players. The funding rate matters as it acts as a real-time gauge of market sentiment, with negative rates indicating that shorts are in charge and perpetual futures are trading at a discount to spot price. In recent weeks, funding rates have been consistently negative, with bitcoin's 30-day average funding rate at negative 5%, compared to the historical norm of positive 8%.
Thielen identified three sources for the short pressure in the futures market: hedge fund redemptions, institutional trades requiring shorting bitcoin futures as a hedge, and bitcoin miners pivoting to artificial intelligence. These mechanical risk-management trades are not bearish bets but rather a sign of structural changes in the market.