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Bitcoin funding rates hit most negative since 2023, history suggests bottom is in
TL;DR
Bitcoin funding rates have reached their most negative levels since 2023, indicating potential market bottoms. Despite negative funding, Bitcoin's price has risen to around $75,000.
Key points
- Bitcoin funding rates hit most negative since 2023
- Current funding rates at around -0.005%
- Negative rates indicate market skewed towards downside bets
- Bitcoin price has risen to around $75,000
- Historically, negative funding rates coincide with market bottoms
Bitcoin BTC$74,315.01 funding rates have hit their most negative levels since 2023, a signal that has historically coincided with market bottoms, as BTC continues to push higher through $75,000.
On a seven-day moving average, funding rates have dropped to around -0.005%, according to Glassnode data.
Funding rates are periodic payments exchanged between long and short traders in perpetual futures contracts, designed to keep prices aligned with the underlying spot market. When the rate is positive, long traders pay short traders, reflecting bullish positioning. When the rate turns negative, shorts pay longs, indicating a market skewed toward downside bets.
Despite the current sustained stretch of negative funding throughout March and April, bitcoin has continued to grind higher, climbing from the low to mid $60,000s to around $75,000.
Historically, deeply negative funding rates have often coincided with local bottoms in bitcoin’s price. This dynamic typically reflects crowded short positioning, which can create the conditions for a squeeze higher as bearish bets are unwound.
This pattern has played out across multiple market cycles. In March 2020, during the COVID-19 induced market crash, bitcoin fell to around $3,000 as funding rates turned sharply negative.
A similar setup emerged in mid 2021 amid China’s mining ban, when prices dropped to $30,000. Funding rates were also at their most extreme during the FTX collapse in November 2022, when bitcoin bottomed near $15,000.
The trend continued into 2023, when funding rates flipped negative during the Silicon Valley Bank crisis, coinciding with bitcoin briefly dipping below $20,000 before recovering. More recently, episodes such as the yen carry trade unwind in August 2024 and the April 2025 “Liberation Day” selloff also saw negative funding align with local lows.
The persistence of negative funding rates suggests that bearish positioning remains elevated, even as price action trends higher. This divergence may indicate that the market is climbing a wall of worry, with short positioning potentially acting as fuel for further upside.
Q&A
What are Bitcoin funding rates and why are they important?
Bitcoin funding rates are periodic payments between long and short traders in perpetual futures contracts, crucial for aligning prices with the spot market.
What does a negative Bitcoin funding rate indicate?
A negative Bitcoin funding rate suggests a market skewed towards bearish bets, often signaling potential local price bottoms.
How has Bitcoin's price reacted to negative funding rates historically?
Historically, deeply negative funding rates have coincided with local price bottoms, often leading to upward price movements as bearish positions are unwound.
