Bitcoin bears pay to bet on further declines as futures positions near yearly lows
Bitcoin futures data shows a decline in open interest and negative funding rates, suggesting that traders are increasingly betting on further price drops. Despite being a top performer in the third quarter, the cryptocurrency is facing pressure amid broader market shifts and geopolitical concerns.
Why it matters
The shift in sentiment among derivatives traders provides insight into market volatility and investor confidence in digital assets during periods of economic uncertainty.
That’s the message from key metrics such as open interest and annualized perpetual funding rates.
Open interest, or the number of active futures bets, stood at 652,000 BTC as of this writing, one of its lowest levels this year. The tally peaked at 800,000 early this year, according to data source Coinglass.
The slide reflects a capital exodus, characterized by traders staying away from leveraged plays despite the 40% rise in bitcoin’s price in the third quarter.
Further, perpetual funding rates have again flipped negative, hovering at an average of minus 0.3% across major exchanges. While every long is matched by a short, the two sides do not want the trade equally. This is where funding rates help. A negative rate shows that short sellers are the ones aggressively chasing the trade and are willing to pay a cost to longs or bulls to keep their bearish bets open.
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