After a series of recent liquidations, traders are once again layering in short positions, driving the funding rates for Bitcoin into negative territory as seen in August 2024 levels.

Extreme Bear Bets Before 2024 Reversal

Analysis by Santiment indicates that funding rates during that timeframe fell deeply negative as traders positioned themselves for downward movements amid widespread fear and bearish sentiment in the market. Contrary to expectations, however, Bitcoin made a significant recovery following this period.

When aggregated funding rates across exchanges fall significantly below zero, it signals a majority of traders are betting on declining prices, frequently driven by fear and uncertainty. Such conditions can create opportunities for sudden price reversals if a sufficient number of short positions are liquidated.

Aftermath of October Binance Liquidations

On October 10, 2025, a liquidation event on Binance triggered a sharp drop in Bitcoin’s price, leading traders to shift towards short positions. Current metrics suggest a similar sentiment shift with heavy short betting, though it does not guarantee immediate price recovery.

In this environment, as traders are unlikely to voluntarily close their short positions, liquidation-driven moves could potentially result in rapid price increases, contributing to greater market volatility.