Bitcoin traders turn bearish as funding rates dive despite $68K support hold

Bitcoin traders are showing growing bearish sentiment as derivatives markets tilt toward short positions, even though the flagship cryptocurrency continues to defend key support near $68,000–$69,000.

Data from derivatives analytics platforms indicates that Bitcoin funding rates have plunged deep into negative territory.  According to data from CryptoQuant, short sellers are paying long traders to keep their bearish positions open as funding rates have remained negative. This trend reflects rising bets on price declines, a dynamic typically associated with pessimistic market sentiment.

Negative funding rates indicate that many traders expect the price to decline

Fear is growing in the derivatives market because short sellers believe Bitcoin’s price could drop further and are willing to pay to keep their bearish bets open.

However, the price of Bitcoin has pulled back from higher levels and now remains steady between $62,000 and $69,000. The spot price continues to hold key support near $68,000–$69,000 even though futures traders increase short positions.

Based on these results, the market is divided between the futures market, which reflects pessimism, and the spot market, which shows stability. Buyers step in when the price approaches support, and even if they don’t raise the price, they prevent a crash.

Back in November 2025, Bitcoin traded near $80,000 after a pullback, but traders continued to open long positions and pay to hold them because they believed the market would recover quickly.

Yet traders today are opening short positions rather than buying aggressively because they expect further downside, even though Bitcoin is holding above major support.

Similarly, selling pressure is at its highest because buyers are defending support but aren’t chasing breakouts. As a result, the price remains stable, but momentum weakens.

Short sellers may rush to close their positions, creating sharp upward moves if the price suddenly rises. On the other hand, the bearish bets could strengthen and push the market lower if support finally breaks. 

Falling leverage helps clean up the market and makes it safer for traders

For over a year, traders took out loans to invest in Bitcoin as the price kept rising, reaching a peak of $126,200 in October 2025. They increased the size of their positions and took out more loans because they believed the trend would continue.

However, high leverage makes the market fragile because a small price drop can trigger forced selling. After its peak, Bitcoin’s price began to fall, triggering waves of liquidations as pullbacks repeated. Exchanges had to close many traders’ positions, reducing overall leverage in the system.

Many traders lost their appetite for extreme leverage; thus, they stepped back to reduce risk rather than chase quick gains with borrowed money.

And yes, liquidation cycles may look ugly in the short term as prices move quickly, people lose money, and the attitude is negative. But they also weed out the weak hands and drive out the people who relied too heavily on leverage. And when those positions are gone, the market stabilizes.

This also means there is a reduced risk of cascading crashes.

Funding rates remain negative, indicating that traders expect prices to continue to decline. The futures market remains bearish. But traders are less leveraged, meaning they don’t have as many large positions as they used to. Despite all the fear, it seems balanced.

Sentiment appears extremely bearish at first glance. Leverage is still expected to decline, and funding rates reflect this. However, under the surface, a lot of the leverage has already been cleaned up. The system is cleaner than it was during the rally.

Throughout history, similar resets often occurred just before a more sustainable recovery. This is because the market, in its efforts to remove extreme risk, is laying the foundation for a stronger trend. This does not guarantee a quick rally, but it does improve the foundation.

The $60,000 level serves as support. If the price drops below this level, the current bearish trend might be confirmed. The decline might continue. The range of $67,000 – $69,000 acts as a short-term resistance level. If Bitcoin breaks above this level while many short positions are already open, it might trigger a short squeeze.

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