As the price of Bitcoin meets resistance at the $80,000 level, perpetual futures funding rates have slightly turned negative and reached -2% on an annual basis. This movement in funding rates indicates increasing market uncertainty and investors searching for direction.

The funding rate set for perpetual futures contracts balances the cost between long and short positions. Positive funding rates signal bull markets where long positions pay short positions, while negative rates indicate the opposite and usually align with downward trends. Over the past two weeks, funding rates have been fluctuating between positive and negative, revealing the market’s indecision about direction.

SIGN OF A BOTTOM FORMATION

According to Glassnode data, the daily funding rate dropped to -0.006%, reaching -2% annually. This is considered a significant indicator suggesting a turning point in Bitcoin’s price movements. Historically, during major downturns like the Covid-19 crisis, the FTX crash, and China’s mining ban in 2021, prolonged periods of negative funding rates signaled bottom formations for Bitcoin.

INVESTOR SEARCH FOR DIRECTION CONTINUES

However, currently, a dynamic preventing prolonged negative funding rates in Bitcoin is observed. Each upward wave in the past two weeks has led investors to rapidly change their positions. Long positions opened during price rises were largely liquidated when the price reversed, making it challenging for funding rates to sustainably remain negative. As investors continue to search for direction in the market after losing Bitcoin’s 200-day moving average, the persistence of negative funding rates remains a critical indicator for the long-term trend of the market.