Is Bitcoin’s negative futures funding rate a sign of an upcoming BTC price crash?
Bitcoin bears celebrate as demand for leveraged long positions hits a six-month low, but crypto traders on X think it’s time to go long.
On April 18, Bitcoin (BTC) futures contracts exhibited significant demand for short (sell) positions, sparking speculations of further bearish momentum. This trend was influenced by the lack of inflows into spot Bitcoin exchange-traded funds (ETFs) and the expectations of rising interest rates in the U.S., all contributing to a negative market sentiment.
Retail traders often favor perpetual futures, a type of derivative that closely mirrors the price movements of regular spot markets. To maintain balanced risk exposure, exchanges implement a fee every eight hours, known as the funding rate.
This rate turns positive when buyers (longs) demand more leverage, and negative when sellers (shorts) seek additional leverage. Typically, a neutral funding rate is around 0.025 per 8-hour period or 0.5% weekly. Conversely, negative funding rates, though infrequent, are seen as highly bearish indicators.
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Author: Marcel Pechman
