Van Straten notes that funding rates for Bitcoin turned negative briefly, which typically indicates a local bottom.

Bitcoin Funding Rates Turn Negative for the First Time in 2025, Indicating Possible Price Support

The perpetual funding rate for Bitcoin (BTC) futures briefly turned negative on Thursday, marking its first dip below zero this year, according to Glassnode data. This rare occurrence comes as Bitcoin continues to trade within its established range of $90,000 to $100,000 since November, navigating swings in sentiment that alternate between bullish and bearish.

Historically, Bitcoin funding rates offer valuable insights into market dynamics. A positive funding rate indicates that traders are paying a premium to maintain long positions, reflecting bullish sentiment. Conversely, a negative funding rate occurs when short sellers dominate, suggesting bearish expectations in the market.

Market Behavior Around Key Levels

BTC’s price movements have remained confined within a critical range, with $90,000 acting as a psychological support and $100,000 as a resistance level. Investors’ sentiment tends to mirror these price points—optimism grows near $100,000, while dips toward $90,000 often result in bearish outlooks. This cyclical behavior creates opportunities for leveraged traders, but also exposes them to potential liquidation cascades during sharp market moves.

Thursday’s brief negative funding rate (-0.001%) coincided with a dip in Bitcoin’s price to $92,500. While mild compared to historical extremes, such as the -0.309% rate during the COVID-19 market crash in March 2020, the shift caused a liquidation of over-leveraged short positions, resetting the market and propelling Bitcoin back above $94,000.

The Significance of Negative Funding Rates

Negative funding rates often signal that traders are over-leveraged on bearish positions. This imbalance can create conditions for a price rebound as shorts scramble to cover their positions. However, negative rates alone do not guarantee an immediate reversal and should be considered alongside other indicators, such as volume trends, order book depth, and macroeconomic factors.

Since the onset of 2023’s bull market, funding rates have mostly remained positive, indicating strong demand for Bitcoin. Nonetheless, intermittent negative rates have typically coincided with local bottoms, such as during the market disruptions caused by the Silicon Valley Bank collapse in 2023 and 2024. These moments were followed by significant price recoveries, reinforcing the importance of negative rates as a potential bottoming signal.

Derivatives and Market Sentiment

The increasing role of derivatives like perpetual futures contracts amplifies Bitcoin’s price volatility. Although derivatives account for a small fraction of the market capitalization, their influence has grown as traders use them to hedge or speculate on price movements.

The Thursday funding rate dip highlights this dynamic. It reflects the ongoing tug-of-war between bulls and bears, with leverage flushes serving as market resets. For now, Bitcoin’s ability to maintain support above $90,000 amid brief bearish sentiment suggests that the broader market remains resilient, even as it navigates periods of heightened volatility.