Bitcoin funding rates have reached their most negative level since 2023, a signal that has historically coincided with market bottoms as BTC continues to rise to $75,000.
According to Glassnode data, on a 7-day moving average, the funding rate has fallen to around -0.005%.
Funding rates are periodic payments exchanged between long and short traders on perpetual futures contracts, designed to bring prices into line with the underlying spot market. If the rate is positive, the long trader pays the short trader, reflecting bullish positioning. When interest rates go negative, shorts pay longs, indicating the market is biased towards downside bets.
Currently, despite negative funding from March to April, Bitcoin continues to rise, rising from the low-to-mid $60,000s to around $75,000.
Historically, significantly negative funding rates have often coincided with local bottoms in the Bitcoin price. This dynamic typically reflects crowded short positioning and can create conditions for a higher squeeze as bearish bets unwind.
This pattern has played out over multiple market cycles. In March 2020, during the market crash caused by the coronavirus disease (COVID-19), Bitcoin fell to around $3,000 as funding rates suddenly turned negative.
A similar setup emerged in mid-2021 amid China’s mining ban, when prices fell to $30,000. The funding rate was also at its most extreme during the FTX collapse in November 2022, when Bitcoin bottomed out at nearly $15,000.
This trend continued through 2023, coinciding with the Silicon Valley banking crisis when funding rates turned negative and Bitcoin briefly fell below $20,000 before recovering. More recent episodes such as the unwinding of the Yen Carry trade in August 2024 and the “Liberation Day” decline in April 2025 have also seen negative funding coincide with local lows.
The persistence of negative funding rates suggests that bearish positioning remains high despite the upward trend in price trends. This divergence could indicate that the market is breaking through a wall of fear, and short positions could serve as fuel for further upside.
