Crypto analyst and macro research specialist Alex Adler Jr. has spotted something interesting in Bitcoin’s market data. In his latest post on X, he highlights a key indicator that has repeatedly signaled major price moves – Bitcoin’s average funding rate across Binance, Bybit, and OKX has dropped to zero.
Why does this matter? Because every time this has happened in the current cycle, Bitcoin has taken off on a strong rally. Could we be on the verge of another breakout? The data suggests it might not be just a coincidence.
Let’s break it down.
Adler shared a chart titled “BTC: Futures Perpetual Funding Rate (7D-SMA),” showing that the average funding rate across these exchanges has now hit zero. This rate measures the balance between long (bullish) and short (bearish) positions in Bitcoin futures trading.
Here’s how it works:
According to Adler, in previous cases, Bitcoin has gained strong momentum soon after the funding rate hit zero.
Bitcoin started the month at $102,417.80 but saw a 5.67% decline between February 1 and 5. From February 6 to 9, it traded within a narrow range of $96,615 to $96,440, struggling to find direction. Then, on February 10, Bitcoin broke out of this range with a bullish push.
Over the past 24 hours, BTC has risen 0.9%, but it has yet to fully recover from its early February correction. Over the past 14 days, Bitcoin is still down 4.3%.
With the funding rate at zero and past trends suggesting a bullish outcome, Bitcoin could be setting up for another rally. If history repeats itself, traders might soon see a strong upward move. Investors will be watching closely to see if this key indicator proves reliable once again.
A neutral funding rate has sparked rallies before – will this time be any different? Let’s wait and see.
Bitcoin funding rates are periodic payments between long and short traders in perpetual futures contracts, ensuring price alignment with the spot market.
A negative funding rate can be bullish as it signals bearish sentiment, potentially leading to a short squeeze and upward price movement.
You can check Bitcoin funding rates on exchanges like Binance, Bybit, and OKX under their futures trading sections or use market data aggregators.
High funding rates indicate strong bullish sentiment, meaning more traders are paying to hold long positions, but it can signal an overheated market.
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