🗞️ Funding rates are flashing a setup seen before BTC’s biggest moves

Derivatives markets have started regaining some positivity this July.

We can see this in Binance’s funding rates, which represent the largest futures trading volumes.

— 💡 In this chart, the technical indicator has been transformed into a dynamic monthly aggregation designed to extract market sentiment rather than to build trading strategies, as it is typically used.

It’s a tool that can prove far more effective than the well known Fear and Greed Index, which during bear markets stays stuck in fear or extreme fear for the entire period. —

Between March and late May, Bitcoin went through a strong period of pessimism, as the correction on Bitcoin had exceeded 50%.

📉 This buildup of short positions, mechanically pushing funding rates down until they turned negative, notably fueled BTC’s technical rebound, which reached $82 000 during the month of May.

This consensus of negativity alone is not what drives every reversal, as we can see on this chart.

A contradiction needs to form first, with funding rates turning positive again before that happens.

📊 This type of setup has occurred a few times over recent years. For example in September 2024, when BTC went from $54 000 to $106 000, or in December 2022, when BTC was trading around $16 000.

This setup is playing out again today, suggesting that negativity recently reached its peak, potentially leaving room for a bullish rebuild in the months ahead.

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