Bitcoin is showing signs of potentially hitting a market bottom, as bearish sentiment and macroeconomic uncertainties weigh heavily on both crypto and traditional markets, according to a recent report by K33 Research. Analysts Vetle Lunde and David Zimmerman highlighted that negative perpetual funding rates in the bitcoin market could be an indicator of future price recovery.
In recent weeks, bitcoin has faced downward pressure due to economic concerns, including potential Federal Reserve rate cuts and weak U.S. job data. This has led to widespread risk aversion across financial markets, with the S&P 500 and Nasdaq also posting negative returns at the start of September.
The correlation between bitcoin and the S&P 500 has surged to a 23-month high of 0.67, K33 noted, suggesting that crypto markets are increasingly sensitive to broader economic events. Key data points, such as Wednesday’s U.S. Consumer Price Index (CPI) release and the Federal Open Market Committee (FOMC) meeting on Sept. 18, are expected to significantly impact the crypto market.
One of the key signals discussed in the report is the persistent negative funding rates in the perpetual swaps market. The 30-day average funding rates have turned negative for the seventh time since 2018, a development that has historically coincided with market bottoms for bitcoin. K33’s data shows that after funding rates flip negative, average 90-day returns have been 79%, with median returns at 55%, offering a potential bullish outlook for the coming months.
In addition to negative funding rates, open interest in bitcoin futures is approaching its highest levels since July, creating conditions for potential short squeezes. This dynamic, along with other factors such as a possible Federal Reserve policy pivot, the upcoming U.S. election, repayments from the FTX collapse, seasonality, and the delayed halving effects, strengthens K33’s bullish thesis for bitcoin toward the end of the year.
