Bitcoin has climbed roughly 14% this month — its strongest monthly performance in a year — with many traders expecting a push toward the $80,000 level last seen in January. However, activity in the perpetual futures market appears to be sending a conflicting signal.
Funding rates, which typically reflect market sentiment, have turned negative — a condition usually associated with bearish positioning. This divergence between rising spot prices and negative funding has led some participants to question the strength of the current rally.
But according to 10x Research founder Markus Thielen, the signal may be widely misinterpreted. Rather than indicating a broad bearish outlook, he argues the negative funding rates are largely driven by institutional hedging strategies, pointing to a structural shift in market behavior as more sophisticated players enter the space.
Perpetual futures — contracts designed to track bitcoin’s price without expiration — rely on funding rates to stay aligned with spot markets. When futures trade above spot, long positions pay shorts, producing a positive rate. When futures fall below spot, shorts pay longs, resulting in negative funding.
Recently, funding rates have remained consistently below zero, with bitcoin’s 30-day average sitting near negative 5%, compared to a historical norm closer to positive 8%, according to 10x Research. This growing gap comes even as bitcoin’s price continues to rise.
Thielen suggests the trend reflects structural positioning rather than a shift in sentiment. He points to several institutional dynamics driving the short pressure in futures markets.
One factor is hedge fund redemptions. After years of underperforming bitcoin, many crypto hedge funds are seeing capital withdrawals. During redemption periods, these funds often short bitcoin futures to hedge exposure while waiting for funds to be returned — a mechanical risk management process rather than a directional bet.
Another driver involves institutional arbitrage strategies tied to Strategy (formerly MicroStrategy). Some investors are going long on the company’s equity while shorting bitcoin futures, betting the stock will outperform the underlying asset. Others are targeting the yield on Strategy’s preferred shares, using futures shorts to hedge out bitcoin price volatility. With the company raising $3.5 billion in April alone, these trades have scaled significantly.
A third factor comes from bitcoin miners pivoting toward artificial intelligence. Companies such as Hut 8 have begun reducing bitcoin production while expanding into AI-related infrastructure. Investors buying into these firms often short bitcoin futures to remove direct crypto exposure, again using futures as a hedging tool rather than a bearish position.
Taken together, these flows suggest that the negative funding rates may not reflect weakening confidence in bitcoin. Instead, they highlight the growing role of institutional strategies reshaping derivatives markets — where short positioning is increasingly tied to hedging and arbitrage, not outright bets against price.
