The bitcoin price has surged approximately 14% this month, marking its best monthly performance in a year. Despite this, the perpetual futures market is exhibiting unusual behavior, with funding rates currently in negative territory. According to 10x Research Founder Markus Thielen, this divergence can be attributed to hedging activities by institutions, rather than a lack of confidence in bitcoin's recent performance.
Thielen, who predicted a rally to $125,000 in early 2023, suggests that 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 aligned with spot prices, has been consistently negative in recent weeks, indicating that shorts are dominating the market. However, Thielen identifies three key sources of short pressure in the futures market, including hedge fund redemptions, institutional trades, and the growing trend of bitcoin miners pivoting to artificial intelligence.
These factors, he argues, are driving the negative funding rate, rather than a broad bearish sentiment in the market.