Bitcoin funding rate on Binance – the largest global cryptocurrency exchange by trading volume – has dropped to its lowest level of the year, signaling a shift in market sentiment.
According to CryptoQuant analyst EgyHash, Bitcoin funding rate on the exchange has remained negative for three consecutive days.
This bearish trend, which last appeared in October 2023, shows that the number of traders betting on Bitcoin's price falling has surpassed the number of those betting on it rising.
Bitcoin funding rate on Binance. Source: CryptoQuant
The significance of this change
Funding rate on Binance has been used to measure market sentiment for some time, showing the change in trader sentiment based on Long and Short positions.
When the funding rate turns negative, the Short side will have to pay the Long side, indicating an increasing demand for Short positions.
According to EgyHash data, the current funding rate “has reached its highest negative level” so far this year as Short positions dominate “the perpetual contract market.”
The average funding rate (aggregating funding rates across all exchanges) has also turned negative, indicating a “short-term” bearish trend.
Pessimism is reinforced
An August 16 10x Research report noted the lack of institutional interest in BTC, suggesting they “appear reluctant to participate in the market at current levels.”
The report gauges institutional sentiment through the seven-day minting rate – a stablecoin metric considered a clear indicator of BTC buyer activity.
Markus Thielen, founder of 10x Research, explained that stablecoin inflows are “important signals” where fiat money is converted into crypto and transferred into BTC or Ether.
Positive ETF
On August 15, spot BTC ETFs saw positive movements, with inflows recorded at $11.11 million despite investor interest in the Grayscale Bitcoin Trust (GBTC) declining.
The total net asset value of spot Bitcoin ETFs reached $51.99 billion after witnessing a net inflow of $17.33 billion.
Although funding has turned negative, these ETF figures show growing demand from institutional and retail investors eyeing BTC as a viable digital asset to invest in.
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