Bitcoin Funding Rates Hit -4.5%, Most Negative Since 2022
Deeply negative funding rates are mirroring 2023 conditions as traders maintain bearish bets despite recent Bitcoin price rallies, setting up potential short squeeze conditions.
Key Takeaway
Traders betting against Bitcoin despite price gains set up conditions for another short squeeze like 2023.
Bitcoin's 30-day cumulative funding rate on Binance sits at -4.5%, the most negative reading since late 2022 when the rate hit -7% as BTC emerged from the bear market.
Analyst Darkfost said Bitcoin has now entered a disbelief phase as funding rates stay bearish. Traders still prefer to fight the trend rather than follow it, he noted. The negative funding means short sellers are paying longs to hold their positions, a reversal of the typical market structure where longs pay shorts.
BitMEX showed the deepest negativity among major exchanges at -0.0160%, while Bybit registered -0.0041%.
The shorts got punished as Bitcoin rallied. ₱12.14 billion ($200 million) in short positions were liquidated when BTC hit ₱4,795,683 ($79,000), according to exchange data. Crypto trader Max Traders said Bitcoin funding rates haven't been this negative in a long while.
Crypto trader CGT Trader explained that the Coinbase Premium Index recorded a big spike in institutional demand at the recent local top. The index measures the price difference between Coinbase and other exchanges, with premiums indicating US institutional buying pressure. Bitcoin's recent upside was driven by institutional spot buying pressure in recent weeks, not derivatives speculation.
Zero Stack CEO Daniel Rice Feria said deeply negative funding rates indicate the market is heavily short, making short positions expensive to maintain if price moves higher. Kenzo Finance noted that current structural setups with negative funding rates mirror 2023 conditions, which preceded market volatility.
This article was written based on reporting from NewsBTC.
