K33 Research: Short Sellers May Be About to Run Out of Gas, Bitcoin Contract Funding Rates in Negative Territory for First Time Since Bear Bottom of 2022

Funding rates for bitcoin perpetual futures have been below neutral for more than 30 consecutive days, and the average four-week funding rate is now at negative levels for the first time since December 25, 2022, according to K33 Research analyst Vetle Lunde. When bitcoin perpetual futures funding rates are negative, it means that traders are mostly betting on falling asset prices. But hedged or outright short positions are becoming more crowded, a clear indicator that sellers are nearing exhaustion.

Analysts point out that if the market follows seasonal trends, then September will be a good opportunity to buy on the low side, followed by a possible recovery in the fourth quarter of the year. Historically, buying low in September does lead to decent year-end gains.