Bitcoin’s price has experienced volatility this week, dropping below $100,000 before rebounding to around $108,000. However, on-chain data reveals traders remain cautious, showing reluctance to bet heavily on further price gains.
On June 27, on-chain analytics firm Glassnode highlighted a persistent decline in Bitcoin’s funding rates, indicating increased short-side positioning in the derivatives market. Two key metrics illustrate this trend:
- Annualized Perpetual Funding Rates: This rate tracks payments exchanged between long and short traders in perpetual futures. A positive value indicates long traders pay shorts, signaling bullish sentiment. Conversely, a negative rate means shorts pay longs, reflecting bearish sentiment.
- 3-Month Futures Annualized Rolling Basis: This metric estimates annualized returns from buying Bitcoin on the spot market while simultaneously selling 3-month futures contracts. Futures typically trade at a premium to spot prices, presenting profit opportunities.
Since November, both metrics have trended downward. Glassnode noted that despite active futures trading, demand for long exposure is fading, suggesting a rise in caution or neutral to bearish positioning among traders.
This shift toward short positions contrasts with steady institutional interest in US-based Bitcoin exchange-traded funds and an improving macroeconomic outlook, which offer positive support for the market.
The combination of falling funding rates and ongoing capital inflows raises the possibility of a short squeeze, where short sellers may be forced to close positions, potentially driving prices higher. Historically, cryptocurrency markets often move contrary to prevailing crowd sentiment.
At the time of reporting, Bitcoin trades near $107,180, with little change over the past 24 hours.