Although Bitcoin is currently back above $71,000 after resuming its rally earlier today, its derivatives market is flashing an unusual bearish signal.
Despite the ongoing price surge, broader market sentiment still remains widely bearish as the market has continued to see frequent short-term rallies since the market cycle flipped bearish late last year.
While the market volatility had pushed Bitcoin to extremely low levels, hitting prices below half of its all-time high, none of the rallies have been strong enough to help Bitcoin even reclaim the crucial $100,000 level.
Bitcoin’s funding rate 30-day percentile drops to 6%
According to a recent analysis from crypto analytics platform Cryptoquant, Bitcoin's funding rate 30-day percentile has dropped to just 6%, its lowest level since early 2023.
It is important to note that funding rates are a key metric on perpetual futures markets, which determines whether long traders pay short traders or vice versa.
Usually, when the rate turns negative, it means short sellers are paying longs, indicating that traders are increasingly betting on further downside.
Cryptoquant showcased data from major crypto exchanges like Binance and others, revealing that the 30-day funding rate percentile, which compares today’s funding level against the previous month’s readings, has fallen to an extremely low level.
Simply put, at 6%, only about 6% of the past 30 days recorded funding rates lower than the current level, meaning 94% of the month saw higher funding than today.
Bitcoin derivatives see sudden bearish shift
While the recent market volatility has lasted for months, recent trends show that this bearish positioning on the Bitcoin derivatives market has become persistent.
Over the past month, 25 out of the last 30 days recorded negative funding rates. This suggests that the derivatives market has been leaning heavily toward short positions for weeks.
This marks a sharp reversal from the conditions seen earlier this year. In January, average daily funding hovered around +0.005%, with the funding percentile remaining above 80% for much of the month. This means that long traders were largely paying shorts at the time as bullish sentiment dominated.
However, this changed in February when the market dynamics flipped bearish as average funding dropped to around -0.003%, and the bearish pressure intensified into March, where the average has fallen further to about -0.004%.
Dan Burgin
Vladislav Sopov
