Bitcoin Perpetual Futures Market Analysis

The bitcoin perpetual futures market indicates significant pessimism with funding rates remaining below neutral for an extended period. This mirrors the considerable price drop the digital asset faced in November 2022, as noted by K33 Research analyst Vetle Lunde.

“We’re in the deepest funding rate environment since bitcoin’s 80% drawdown in November 2022,” says Lunde. He mentions that the current hedging and short-biased bets are overcrowded, suggesting a potential nearing of sell-side exhaustion.

In the recent K33 Research report, Lunde highlights that the funding rate for bitcoin perpetual futures has been persistently below neutral for over 30 days, the longest streak since a 36-day period in May 2024. He contrasts this with May’s longer stretch but points out that current negative rates are lower, marking the first time rates have been below zero since December 25, 2022.

Lunde notes that when the funding rate is negative, traders predominantly bet on declining prices.

Yet, there may be an upside: according to Lunde, September historically presents opportunities for buying dips ahead of a potential recovery in Q4. He states, “Buying blood in September to build exposure for Q4 has historically been the best spot strategy.”

Currently, the price of bitcoin increased over 4% in the last 24 hours, trading at $56,462 as of 7:09 a.m. ET. Bitcoin’s dominance stands at 53.9%, with ether at 13.9%, according to CoinGecko data.