Bitcoin is now above $71,000 after resuming its rise earlier today, but its derivatives market is sending an unusual bearish signal.
Despite the continued rise in prices, overall market sentiment remains broadly bearish, as the market has experienced frequent short-term rallies since the market cycle turned bearish late last year.
Market volatility drove Bitcoin to extremely low levels, with the price less than half of its all-time high, but there was no strong enough rebound for Bitcoin to regain the critical $100,000 level.
Bitcoin 30-day percentile funding rate drops to 6%
According to recent information, analysis Bitcoin’s 30-day percentile funding rate has fallen to just 6%, its lowest level since early 2023, according to crypto analysis platform Cryptoquant.
It is important to note that the funding rate is a key indicator in the perpetual futures market and determines whether long traders pay short traders and vice versa.
Typically, when rates turn negative, it means short sellers are paying off their longs, indicating that traders are betting on further declines.
Cryptoquant presented data from major crypto exchanges including: Binance The 30-day funding rate percentile, which compares today’s funding levels to last month’s measurements, has fallen to extremely low levels.
Simply put, 6% means that only about 6% of the past 30 days had a funding rate lower than the current level, and 94% of the months had a funding rate higher than today.
Bitcoin derivatives suddenly turn bearish
Recent market volatility has been ongoing for several months, and recent trends indicate this bearish attitude towards the market. Bitcoin Derivatives markets are gaining ground.
Over the past month, negative funding rates have been recorded for 25 of the past 30 days. This suggests that the derivatives market has been heavily tilted towards short positions in recent weeks.
This marks a sharp reversal from the situation seen earlier this year. The average daily funding amount hovered around +0.005% in January, and the funding percentile remained above 80% for much of the month. This means that long traders were primarily paying shorts at a time when bullish sentiment prevailed.
However, the situation changed completely in February when market dynamics turned bearish as average funding fell to around -0.003%, and bearish pressure intensified in March, pushing the average further down to around -0.004%.
