Bitcoin’s First Negative Funding Rate of the Year Signals a Shift in Market Sentiment: Is $60,000 or $70,000 Next?

• Bitcoin’s funding rate on the futures and derivatives market has dried up, turning negative for the first time this year as the market sentiment seems to shift post-halving.
• Analysts expect the upside to be capped in the short term and for the spot price to consolidate.

Bitcoin’s funding rate has trended lower this year, and in the past week, it dried up, turning negative for the first time since last October as the top crypto battles its cyclic post-halving price dip.

BTC trades at $63,593, dipping 4.14% in the past day from an intra-day high of $66,720. Investor interest remains high, with trading volume rising 33% to $31.9 billion. The top crypto underwent its halving less than a week ago and has managed to fight off the bears, gaining 3.3% in the past week.

However, as research platform Kaiko highlighted on X, investor interest in the derivatives market has been dipping for several weeks now, and in the past week, the funding rate has gone negative. The last time this happened was in October last year.

Funding rates for $BTC perps turned negative for the first time since late 2023 in the lead up to the halving. pic.twitter.com/MjiU4C1L5m

— Kaiko (@KaikoData) April 24, 2024

However, since the halving, the funding rate at the top three exchanges—Bybit, Binance and OKX—has improved slightly, according to data from Coinanalyze.

In an accompanying note, Kaiko noted:

Funding rates for BTC perps remained close to neutral despite briefly flipping negative in the lead-up to the halving. Negative rates mean short sellers are paying longs to maintain their positions. Overall, open interest remains elevated above $10 billion, even though it has retreated from a record high in USD terms in March.

What’s Next for Bitcoin?

Further showcasing that investors have cooled down their interest in Bitcoin, the BTC spot ETFs had a rough day on Wednesday, bringing in a mere $9.8 million; with the Grayscale outflows hitting $130.4 million, the sector recorded a net outflow of $120.6 million.

However, the biggest news was that BlackRock’s IBIT ETF’s red-hot streak finally came to an end. On Wednesday, IBIT failed to record any new investment after 71 days of positive flows, which placed it in the top ten longest ETF inflow streaks of all time.

BLACKROCK SPOT BITCOIN ETF $IBIT REGISTERS FIRST DAY OF ZERO INFLOWS SINCE ITS INCEPTION pic.twitter.com/J8v4og1vys

— Blockchain Daily (@blckchaindaily) April 25, 2024

Analysts are split on whether Bitcoin is going to be hit by the cyclic dump that follows after every halving as investors shift their money to altcoins. Some believe that this time, BTC will hold steady; after all, this is the best performance Bitcoin has put up following a halving.

Tyrone Ross, the founder of 401 Financial, told Yahoo!:

The halving shouldn’t change anything there. It’s literally written in the code… it’s just going to continue. It’s not this special thing or magical event that makes bitcoin any more or less compelling to invest.

Others like Standard Chartered are bullish, and as Crypto News Flash reported, the bank’s analysts expect the top coin to hit $150,000.