Bitcoin’s (BTC) Funding Rate is approaching a pivotal threshold, sparking debate over its short-term price trajectory. While the Aggregate Funding Rate remains positive, a rising number of negative Funding Rates across major exchanges is raising questions about whether BTC is nearing a local bottom.
The Aggregate Funding Rate for Bitcoin across exchanges is close to turning negative but remains positive overall. The more negative it gets on major exchanges, the higher the chance of a local bottom for BTC.
— Alphractal (@Alphractal) February 20, 2025
Stay tuned!
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Negative Funding Rates: A Signal for Market Bottoms?
Historically, negative Funding Rates have often signaled local market bottoms. Similar trends were observed in mid-2022 and early 2023, where negative spikes in Funding Rates preceded price reversals. The current decline suggests growing short interest, as traders are paying to maintain short positions. If this trend continues, it could set the stage for a potential short squeeze, triggering forced liquidations and driving Bitcoin’s price upward.
However, not all instances of negative Funding Rates lead to immediate recoveries. The overall market structure and liquidity conditions will determine whether this marks a true bottom or merely reflects temporary bearish sentiment. If short positions continue to build, BTC could face further volatility before establishing a clear direction.
What Comes Next for Bitcoin?
If historical trends hold, Bitcoin may be on the verge of a local bottom, potentially paving the way for a rebound. A short squeeze could provide the necessary momentum for BTC to break through key resistance levels. However, persistent negative Funding Rates might indicate broader market skepticism, leading to prolonged sideways movement rather than a decisive recovery.
Macroeconomic factors, ETF inflows, and overall market liquidity will play a crucial role in shaping Bitcoin’s next move. Investors should closely monitor these developments to assess BTC’s short-term outlook.
Bitcoin’s Next Move: Sideways Action or Breakout?
At press time, Bitcoin is trading at $98,288, consolidating after multiple failed attempts to breach resistance. The Relative Strength Index (RSI) at 50.93 signals neutral momentum, aligning with the On-Balance Volume (OBV), which remains weak at -90.38K, indicating a lack of strong accumulation.
Resistance lies near $100,000, while support ranges between $92,000 and $94,000. A breakout above psychological resistance could renew bullish sentiment, while a failure to hold support may lead to a deeper correction. Given the negative Funding Rate trend, a short squeeze could be the catalyst for Bitcoin’s next significant move.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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