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BitcoinSistemi 2025-01-10 12:44:09

Funding Turned Negative in Bitcoin! Have Bottom Levels Been Seen? Here Are the Details

For the first time in 2025, Bitcoin’s perpetual-term funding rate has turned negative, and this development could signal a local price bottom, according to analysts. Bitcoin Funding Rates Turn Negative for a Moment, Pointing to a Potential Local Bottom Data from Glassnode shows that the funding rate fell to -0.001% on Thursday, marking a rare event in the ongoing bull market. Bitcoin (BTC) has been stuck in a volatile trading range between $90,000 and $100,000 since mid-November. Sentiment among investors tends to turn bullish as Bitcoin approaches the upper end of this range, while bearish sentiment prevails as the price approaches the lower end. “Bitcoin usually moves where the maximum pain is occurring,” market analyst Van Straten said, referring to the current range-bound price action. Derivatives, including futures and options, contribute to Bitcoin's price fluctuations, even though they represent only a small portion of the total market value. A key metric, the futures perpetual funding rate, measures the periodic payments between long and short positions in perpetual futures contracts. Positive Funding Rate: Long positions pay off short positions, typically observed in bull markets. Negative Funding Rate: Short positions pay off long positions, typically seen in bearish conditions. During bullish periods, funding rates are often positive as investors bet on continued price increases. However, when the market overheats, corrections and liquidation steps often follow. Conversely, in bearish conditions, negative funding rates can trigger sharp recoveries as price bottoms form and traders rush to close their positions. Signal of a Local Bottom? On Thursday, Bitcoin’s funding rate briefly turned negative at -0.001%, sparking a leverage run and a sentiment shift that pushed prices back above $94,000. While this negative rate is mild compared to historical events such as the March 2020 COVID-19 crash, where funding rates reached -0.309%, it still highlights the potential for a local bottom. “Negative funding rates do not guarantee immediate price recoveries, but they are worth monitoring alongside technical indicators to gauge market sentiment,” Van Straten said. Historical data supports this view, with short-term negative funding rates coinciding with price bottoms during major market events such as the Silicon Valley Bank collapse in 2023 and other downturns in 2024, each followed by significant price recoveries. *This is not investment advice. Continue Reading: Funding Turned Negative in Bitcoin! Have Bottom Levels Been Seen? Here Are the Details

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