Bitcoin Traders Retreat: Funding Rate Turns Negative Amidst Shifting Market Sentiment

Bitcoin Traders Retreat: Funding Rate Turns Negative Amidst Shifting Market Sentiment
Table of Contents


  • Bullish Bitcoin traders are reducing their positions due to declining demand after the halving and slowing inflows into ETFs.
  • The Bitcoin funding index fell into negative territory on April 19, for the first time since October 2023.
  • Despite reaching a high of $73,798 in March, BTC has seen a 13% correction since then.

The euphoria surrounding Bitcoin appears to have subsided since the halving event.

Bullish traders have begun to show less enthusiasm for opening long positions in Bitcoin futures, as indicated by the negative funding index recorded by Bloomberg on April 19, a phenomenon not seen since October 2023.

The price of Bitcoin, which had peaked at $73,798 in March, underwent an abrupt correction, falling to around $63,000 by Thursday morning.

This correction in the value of Bitcoin is closely linked to the reduction in demand and lower interest in leveraged bets within the market.

Investors and traders have shown a more cautious and reserved attitude regarding opening new long positions.

This change in market dynamics is notably reflected in the negative financing ratio, which functions as an indicator of general investor sentiment.

Willingness to take risks and confidence in bullish movements have moderated, resulting in lower demand from those seeking to profit through leveraged strategies in the BTC futures market.

Bitcoin Traders Adjust Positions: Funding Rate Turns Negative

Reduction in inflows into US Bitcoin ETFs has contributed to the decline

In recent weeks, there has been a noticeable downturn in the net capital inflows pouring into these Exchange-Traded Funds (ETFs), serving as a clear indicator of reduced levels of investor confidence.

This decline suggests that market participants are exhibiting a more cautious approach towards these investment vehicles, possibly due to shifting market dynamics or changing perceptions about the cryptocurrency landscape.

Furthermore, the decrease in the open interest in Bitcoin futures at the Chicago-based CME Group, which is down 18% from its peak, reflects reduced interest in cryptocurrency exposure and risk management among institutions in the United States.

With the cryptocurrency market seeking new catalysts, attention is shifting towards Hong Kong, which is on the brink of introducing its own suite of Bitcoin and Ethereum ETFs.

However, it remains to be seen whether these novel products can attract a portion of the interest generated by issuers in the United States.


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