The great derivatives disconnect: Why 'negative' funding is actually a bullish signal for Bitcoin

Bitcoin funding rates are flashing one of the most bearish positioning signals in years, even as spot prices keep grinding higher.

Funding rates have been running near minus 4% annualized, James Aitchison, founder and CIO of Caerus Global, said during a panel at Consensus Miami 2026. That means longs are being paid to hold exposure, a rare setup that points to heavy short positioning.

“The longs are getting paid, which is quite a rarity,” Aitchison said. “On a 30-day basis, the lowest it has been this decade.”

The setup mirrors a broader derivatives disconnect. Bitcoin funding rates hit their most negative levels since 2023 in April, even as BTC pushed through $75,000 at the time. Aitchison said similar conditions have historically preceded positive returns over 30- to 365-day periods.

Bitcoin has rebounded from roughly $60,000 to the low $80,000s at the of writing. The move has forced traders to reassess whether old crypto-native signals still work in a market increasingly shaped by ETFs, basis trades and Wall Street distribution.

Spot bitcoin ETF demand has held through the drawdown. U.S. spot bitcoin ETFs pulled in $1.6 billion so far this month, even as short-term holders sold.

That resilience has made ETF holders central to the current market structure. Dan Blackmore, chief commercial officer at Glassnode, said bitcoin is moving into a new regime as volatility falls and allocations become more strategic.

“We’re witnessing the early innings of the Wall Street machine and its impact on the crypto market,” Backmore said.

Options are accelerating that shift. IBIT options open interest topped Deribit in April, pointing to a migration of bitcoin derivatives activity into regulated U.S. venues. Morgan Stanley’s bitcoin ETF opened just last month, adding another large wealth-management platform to the market.

Panelists were split on whether the four-year cycle still matters. Michael Terpin, author of “Bitcoin Supercycle,” said bitcoin could still trade lower before a larger 2028-2029 supply shock. Others argued the halving cycle is losing force as bitcoin becomes a TradFi asset.

The year-end calls reflected the split. Terpin and Backmore said bitcoin may not reach a new high this year. Cole Kennelly, founder of Volmex Labs, said $250,000 is possible. Aitchison said $150,000 is a reasonable target if rate cuts return.