The bitcoin price has surged approximately 14% this month, marking its best monthly performance in a year. However, the perpetual futures market is behaving contrarily, with a negative funding rate indicating that futures are positioned for a price drop.
According to 10x Research's Markus Thielen, this divergence is driven by hedging activity from institutions, representing a structural shift in the market. The negative funding rate is a result of institutional players, such as hedge funds and bitcoin miners, engaging in risk-management trades to neutralize their price exposure. Thielen identifies three sources of short pressure in the futures market: hedge fund redemptions, institutional trades aimed at capturing yields on publicly traded bitcoin treasury companies, and bitcoin miners pivoting to artificial intelligence.
These mechanical risk-management trades are distinct from outright bearish bets on bitcoin futures.