Bitcoin price prediction: funding negative, puts in demand

Something shifted on the derivatives market on Friday morning that the price alone does not show: anyone betting on a falling bitcoin price now has to pay for it. The funding rate on OKX's largest bitcoin perpetual stood at minus 0.0064 percent at the 9 a.m. CET settlement. It had not been that low since early August. At the same time, bitcoin was trading at around $68,800, or €62,200, according to CoinGecko, a little more than 6 percent below the previous day.

What the data show: after the slide below $70,000, the short side is so crowded that it is paying the long side, and for the options expiry on November 27, downside protection is clearly more expensive than a bet on the upside. Our assessment follows further down: negative funding is not a buy signal but an indication of where the leverage now sits. Where the price could head over a horizon of months is set out in the scenarios of our bitcoin price prediction.

Funding rate turns negative: what happened on Friday morning

The funding rate is a payment between holders of long and short positions in perpetual futures, the futures contracts with no expiry date. OKX settles it every eight hours. If the contract trades above the spot price, longs pay shorts. If it trades below, shorts pay longs. That keeps the contract close to the real bitcoin price without it ever expiring.