Bitcoin Funding Rates Show Traders are Cautious as BTC Drops Below $100K Again

Despite the latest Bitcoin upsurge, funding rate data indicates caution among traders amid recent resistance.

Bitcoin started 2025 with a strong rally, climbing 4% on Jan. 6 to reclaim the $100,000 mark for the first time in weeks. The price peaked at $102,760 today before facing resistance, leading to a sharp correction that pushed Bitcoin back below six figures. 

Cautious Market Sentiment Evident in Funding Rates

Meanwhile, despite yesterday’s upsurge, Glassnode disclosed today that funding rates, a notable metric for assessing trader sentiment in derivatives markets, show a cautious outlook in the market. 

📉 After peaking at 0.026% in mid-December, the weekly MA of perpetual funding rates has cooled to 0.009% – just below the neutral 0.01%: https://t.co/CORjRx0X2k

🔍 This suggests a cautious positioning, with speculators showing limited willingness to pay premiums for long… pic.twitter.com/JwSPpZRpeG

— glassnode (@glassnode) January 7, 2025

According to the disclosure, the weekly moving average of perpetual funding rates fell to 0.009%, below the neutral level of 0.01%. This marks a decline from mid-December’s high of 0.026%, showing limited interest in paying premiums for leveraged long positions.  

In addition, Coinglass data reveals that the Open Interest-Weighted Funding Rate increased slightly to 0.0058% but marks a significant drop from Jan. 5’s high of 0.0113%. Similarly, the Volume-Weighted Funding Rate rose to 0.0051%, still far below its previous peak of 0.0111%.  

Notably, these declining funding rates suggest that traders are exercising caution, as Bitcoin battles at the $100,000 psychological mark. The reluctance to take on leveraged exposure indicates concerns about the sustainability of the recent rally.  

Despite this, Bitcoin derivatives trading activity has surged, with 24-hour volume increasing 41.54% to $85.32 billion. Open Interest also rose but by a modest 2.08%, reaching $64.87 billion. The Long/Short Ratio stands at 1.0243, suggesting a near-even split between bullish and bearish sentiment.  

Bitcoin Current Position 

Notably, on the daily chart, the Chande Momentum Index (CMI) rose to 58.71 during Bitcoin’s breakout above $100,000. However, the indicator has since retraced to 47.90. This is largely due to waning bullish strength as the price slipped below $100,000.  

At the time of writing, Bitcoin trades at $99,866 amid a 2.19% decline for the day. Bitcoin’s immediate resistance lies at $101,536, the upper Bollinger Band. Support is at the 20-day moving average of $96,642, a level tested during the Jan. 5 lows.  

Interestingly, market analyst Rekt Capital noted the importance of a daily close above $101,165 to confirm a breakout from Bitcoin’s recent trading range. According to him, failure to reclaim this level could signal prolonged consolidation or further downside. Meanwhile, losing support at $96,642 could intensify bearish pressure.