The recent 14% monthly surge in bitcoin's price to $77,982.20, its best performance in a year, has sparked speculation that the price could soon exceed $80,000. However, the perpetual futures market tells a different story, with funding rates currently below zero, suggesting a lack of confidence in bitcoin's recent performance. According to Markus Thielen, Founder of 10x Research, this divergence can be attributed to hedging activity by institutions rather than a bearish sentiment.
The negative funding rate represents a structural shift in the market driven by the increasing participation of sophisticated players. The funding rate, which is used to keep futures prices in line with spot prices, has been consistently negative in recent weeks, indicating that shorts are dominating the market. Thielen identifies three sources of short pressure in the futures market: hedge fund redemptions, institutional trades aimed at capturing the yield on MSTR preferred shares, and the growing trend of bitcoin miners pivoting to artificial intelligence.
These mechanical risk-management trades, rather than bearish bets, are driving the negative funding rate, suggesting that the futures market is not as bearish as it appears.