Bitcoin’s rising price contrasts with seemingly bearish futures data, though analysts aren’t convinced

Bitcoin has rallied დაახლოებით 14% this month, marking its strongest performance in a year and reviving expectations of a move back above $80,000. Yet, despite the bullish price action, signals from the derivatives market appear to tell a different story.

Perpetual futures funding rates — typically used as a barometer of market sentiment — have turned negative, a development often associated with bearish positioning. The mismatch between rising spot prices and declining funding rates has led some traders to question the durability of the rally.

But 10x Research founder Markus Thielen believes that conclusion is misleading. He argues that the negative funding rates are not the result of widespread bearish bets, but rather reflect institutional hedging strategies that are increasingly shaping bitcoin’s market structure.

Perpetual futures contracts, unlike traditional futures, do not expire and rely on funding payments to keep their prices aligned with the spot market. When futures trade above spot, long positions pay shorts, resulting in positive funding. When futures trade below spot, shorts pay longs, producing negative funding.

In recent weeks, funding rates have consistently remained below zero. Bitcoin’s 30-day average funding rate currently sits near negative 5%, compared with a historical average of around positive 8%, according to 10x Research. Notably, this divergence has widened even as bitcoin’s price has continued to climb.

Thielen attributes this trend to structural forces rather than sentiment, pointing to three main drivers behind the persistent short pressure in futures markets.

First, hedge fund redemptions are contributing to the dynamic. Many crypto hedge funds have lagged bitcoin’s performance over recent years, prompting investor withdrawals. During redemption periods, funds often short bitcoin futures to hedge exposure while awaiting the return of capital — a routine risk-management practice rather than a bearish trade.

Second, institutional strategies linked to Strategy (formerly MicroStrategy) are adding to the pressure. Some investors are taking long positions in the company’s shares while shorting bitcoin futures, betting that the stock will outperform the underlying asset. Others are targeting yields from Strategy’s preferred shares, using futures shorts to hedge out bitcoin price volatility. With billions raised in April, these trades have grown in scale.

Third, a shift among bitcoin miners toward artificial intelligence is also playing a role. Companies like Hut 8 are increasingly investing in AI infrastructure while reducing their reliance on bitcoin mining. Investors buying these stocks often short bitcoin futures to remove direct crypto exposure, again using derivatives as a hedge.

Taken together, these factors suggest the negative funding rates are less about bearish sentiment and more about a changing market structure. As institutional participation deepens, futures positioning is increasingly driven by hedging and arbitrage strategies, meaning traditional indicators may no longer fully capture the underlying dynamics of bitcoin’s price action.

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