Analyst: Bitcoin funding rate falls to its lowest level since 2023, or indicates that a bottom has formed

Comparing news, CoinDesk analyst James Van Straten wrote that the Bitcoin funding rate has fallen to the most negative level since 2023, and historical rules show that such signals often coincide with the bottom of the market. According to Glassnode data, the seven-day moving average of the funding rate has dropped to about -0.005%. The funding rate is a fee that both long and short in a perpetual contract pay to each other on a regular basis to keep the contract price consistent with the spot market. When the rate is positive, the bulls pay the bears, reflecting the bullish sentiment in the market; when the rate is negative, the bears pay the long, indicating that the market is biased towards shorting.

Despite continued negative funding rates from March to April this year, Bitcoin fluctuated upward from the $60,000-$65,000 range to around $75,000. Historically, deep negative funding rates have often coincided with Bitcoin's phased bottom: Bitcoin fell to about $3,000 during the COVID-induced market crash in March 2020; fell to $30,000 during China's mining ban in 2021; bottomed out at around $15,000 when FTX crashed in November 2022; and briefly fell below $20,000 during the 2023 Silicon Valley Bank crisis. Negative capital rates also coincided with phased lows during the closing of the yen arbitrage trade in August 2024 and the Liberation Day sell-off in April 2025.

Continued negative funding rates indicate that even if the price trend is improving, short positions are still at a high level. This divergence may mean that the market is rising through a wall of concern, and large short positions may fuel further upward prices.