Bitcoin Funding Rates Have Dropped to Their Lowest Level in Three Years—What Happened to the Price When This Happened in the Past?

In a notable development in the cryptocurrency market, Bitcoin’s funding rates in derivative markets have fallen to their lowest levels since 2023.

According to analysts, this could be a significant signal that historically coincides with market lows.

According to analyst James Van Straten, the 7-day moving average of Bitcoin funding rates has fallen to approximately -0.005%. The data is provided by Glassnode, and it’s noted that these levels have historically coincided with market lows.

The funding rate is defined as a fee paid periodically between long and short positions in the futures market. A positive funding rate indicates that long positions are paying short positions and that an upward trend is dominant in the market; negative rates indicate that short positions are dominant and a downward trend is expected.

Despite this, a notable divergence is occurring. Although funding rates remained negative throughout March and April, the Bitcoin price fluctuated between $60,000 and $65,000 before rising to approximately $75,000. This indicates a strong accumulation of short positions in the market, yet the price continues to move upwards.

Historical data shows that deep negative funding rates often coincide with significant lows. During the pandemic crash in March 2020, Bitcoin fell to around $3,000, while in 2021, it dropped to $30,000 during China’s mining ban. It reached levels around $15,000 during the FTX crisis in November 2022, and briefly fell below $20,000 during the Silicon Valley Bank crisis in 2023. Similarly, the yen carry trade unraveling in 2024 and Trump’s “Independence Day” sell-off in April 2025 also coincided with negative funding rates.

According to analysts, the current picture indicates that the market is experiencing an uptrend driven by a “wall of anxiety.” The high level of accumulated short positions could pave the way for an even faster price increase in a potential short squeeze scenario.

*This is not investment advice.