Recent data from Binance indicates that the 14-day Simple Moving Average (SMA-14) of Bitcoin Funding Rates has dropped to a critical level of −0.002. This marks the lowest value this metric has recorded since September 2024 (surpassing even the lows observed in May 2025). Concurrently, Bitcoin’s price has been in a grinding downtrend, currently trading around the $66.4K range.
Data Interpretation:
Bearish Dominance: A deeply negative funding rate, especially when sustained over a 14-day average, signals that short traders are aggressively betting on further price declines. These traders are willing to pay a premium to long position holders just to keep their bearish positions open.
Capitulation Signs: Such extreme negative values typically manifest at the tail end of severe downtrends, often coinciding with peak market fear and capitulation.
Market Outlook:
From an on-chain and market psychology perspective, deeply negative funding rates often serve as a strong Contrarian Signal. The market currently appears to be heavily “overcrowded” on the short side.
This setup provides the necessary fuel for a potent Short Squeeze. Even a minor price rebound or a piece of positive news could trigger a cascade of liquidations among these accumulated short positions, propelling the price upward rapidly. While the prevailing price trend remains bearish, the risk-to-reward ratio for opening new short positions is unfavorable at these funding levels.
Conclusion:
Historical patterns suggest that when the Funding Rate SMA-14 dips into negative territory (similar to the instances in May 2025 and November 2024), it often precedes the formation of a local price bottom. Traders should exercise caution, as the market holds high potential for a corrective bullish move.
Written by CryptoOnchain
