Bitcoin funding rates on Binance drop to yearly lows

Bitcoin funding rates on Binance have been tanking hard, hitting lows we haven’t seen since last October. We’re now on day three of this negative streak, and it’s not looking pretty.

Funding rates, for those who need a reminder, are what traders pay to hold their positions on futures contracts. When these rates go negative, it means the market is leaning heavily towards short positions—basically, people betting that Bitcoin’s price is going to drop.

And right now, that’s exactly what’s happening.

The average Bitcoin funding rate across all exchanges is also in the red, confirming that this bearish sentiment is widespread, not just a Binance thing. Binance holds the largest share of open interest (OI), so this is a clear signal that traders are bracing for a rough ride.

At least in the short term.

Bitcoin’s historical pattern sides with the bulls

Bitcoin’s price action over the past few weeks has been wild, bouncing all over the place like a drunken ping-pong ball.

But if you zoom out a bit, you’ll notice that it’s following a pattern we’ve seen before. History doesn’t repeat itself, but it sure does rhyme, especially with Bitcoin.

Remember when Bitcoin was down in the dumps two years ago, stuck in that brutal crypto winter? The price tanked more than 60%, and we were all wondering if it would ever recover.

Fast forward to 2023, and not only did Bitcoin bounce back, it shot up over 50% in December. The early months of 2024 were a continuation of that trend, mainly fueled by the approval of spot Bitcoin ETFs.

These ETFs were scooping up Bitcoin like there was no tomorrow, at one point buying ten times the daily production rate.

This feeding frenzy led to Bitcoin hitting a new all-time high of over $73,000 in March, just before the halving event that slashed miner rewards.

Volatility returns

But of course, nothing goes up in a straight line forever. After that explosive start to 2024, things have been shaky. Between January and April, Bitcoin was on fire, gaining 60% like it was nothing. Then, the rollercoaster started.

Bitcoin dropped from around $65,000 to $53,000 in just a few days. It’s clawed back some of those losses, but the volatility is now back with a vendetta.

Many traders saw that drop and panicked, thinking Bitcoin was running out of steam. But let’s be real, this kind of turbulence is par for the course with Bitcoin.

It’s all part of the same old story—strong moves up followed by sharp corrections. If anything, this volatility just reinforces the idea that Bitcoin’s bull markets are eerily similar to each other.

For those with the guts to stick it out, the ups and downs are just part of the ride.