Bitcoin negative funding rates persist after the October 10 liquidation event, with six of seven recent Binance sessions showing rates near -0.004%. This indicates ongoing short positioning as traders remain cautious on long exposure amid potential squeeze risks near $113K and $126K liquidity zones.
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Persistent Negative Funding: Six out of seven recent sessions on Binance recorded funding rates around -0.004%, signaling a strong preference for short positions among traders.
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Traders avoid long positions due to the impact of the October 10 wipeout, which liquidated leveraged longs and eroded confidence in upward momentum.
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Liquidity clusters at $113,000 and $126,000 levels could trigger short squeezes, with historical data showing similar setups leading to rapid rebounds in 2024 and 2025.
Discover why Bitcoin negative funding rates continue post-October 10 wipeout, with shorts building near key liquidity zones. Explore risks and potential reversals in this in-depth analysis. Stay informed on BTC derivatives trends today.
Why Are Bitcoin Funding Rates Remaining Negative After the October 10 Wipeout?
Bitcoin negative funding rates have continued to dominate on major exchanges like Binance following the sharp liquidation event on October 10, 2025. This stems from traders’ reluctance to rebuild long positions after significant losses wiped out leveraged bets, leading to a sustained bearish bias in the derivatives market. Analyst Darkfost highlights that negative rates around -0.004% in six of the last seven sessions reflect this caution, even as spot prices attempt to stabilize.
How Do Recent Liquidations Influence Trader Positioning in Bitcoin Derivatives?
The October 10 liquidation cascade serves as a pivotal moment, forcing many traders to absorb heavy losses on over-leveraged long positions. According to Darkfost, an independent market analyst on X, this event has instilled a lasting hesitation, prompting participants to favor short exposure instead of risking further upside bets. Data from Binance futures shows funding rates consistently dipping negative, with traders effectively paying to hold shorts amid expectations of continued downside.
Supporting this, historical patterns reveal that such disbelief phases often precede sharp reversals. For instance, in September 2024, a similar negative funding stretch gave way to a strong recovery as shorts were squeezed out. Likewise, April 2025 saw a rebound from deep corrections, underscoring how concentrated bearish positions can amplify bullish moves when sentiment shifts. Darkfost notes that disbelief intensifies precisely when price action begins to defy expectations, setting the stage for forced liquidations.
Current positioning data aligns with this dynamic, with short interest building near key liquidity pools. These zones, identified through order book analysis, include resistance at approximately $113,000 and a higher cluster around $126,000. If Bitcoin’s price surges toward these levels, the unwinding of shorts could propel prices higher, mirroring past cycles like the late 2024 rally from $54,000 to over $100,000.
Frequently Asked Questions
What Caused the October 10 Bitcoin Liquidation Event?
The October 10, 2025, liquidation event was triggered by a rapid price retracement in Bitcoin, catching leveraged long positions off guard and leading to over $1 billion in wiped-out contracts across exchanges. This stemmed from heightened volatility tied to macroeconomic factors, resulting in cascading stops and a shift toward defensive short strategies, as reported by derivatives analytics from Binance.
Could Negative Bitcoin Funding Rates Lead to a Short Squeeze?
Yes, persistent negative funding rates in Bitcoin derivatives can indeed signal building pressure for a short squeeze, especially with concentrated positions near $113K and $126K. As prices stabilize or recover, shorts may face forced closures, sparking upward momentum—much like the quick rebounds observed in late 2024, where disbelief gave way to explosive gains once the tide turned.
Key Takeaways
- Ongoing Bearish Bias: Negative funding rates near -0.004% in recent sessions highlight traders’ caution post-October 10, avoiding longs after liquidation losses.
- Liquidity Risk Zones: Shorts cluster around $113,000 and $126,000, where upward price action could trigger squeezes and extend rallies, per historical patterns.
- Historical Precedents: Similar negative funding phases in 2024 and 2025 preceded strong recoveries, suggesting potential for reversal if sentiment shifts.
Conclusion
In summary, Bitcoin negative funding rates underscore a cautious market environment following the October 10 wipeout, with short positioning dominating derivatives sentiment and liquidity risks looming at key levels like $113,000 and $126,000. As traders navigate this disbelief phase, historical data from sources such as Binance analytics and insights from analyst Darkfost indicate that such setups often resolve into bullish reversals. COINOTAG will continue monitoring these trends—stay tuned for updates on how evolving funding dynamics could shape Bitcoin’s trajectory in the coming weeks.
Derivatives Sentiment and Recent Liquidations
Bitcoin’s derivatives market remains tilted toward bearish sentiment in the wake of the October 10 event. Traders who endured losses during the liquidation frenzy are steering clear of long positions, opting instead to build shorts in anticipation of further declines. This has resulted in negative funding rates persisting across platforms, where short holders receive payments from longs, reinforcing the downward lean.
Darkfost emphasizes that this hesitation mirrors past cycles where initial corrections bred prolonged skepticism. For example, the September 2024 recovery followed a comparable funding dip, as did the April 2025 upswing after a correction. These instances demonstrate how extended negative readings can build the foundation for sharp, liquidity-driven moves once confidence returns.
Short Exposure Could Amplify Bullish Reversal
With shorts accumulating near prominent liquidity clusters above current prices, the potential for a reversal grows. The $113,000 zone and the $126,000 area stand out as critical levels, hosting dense short liquidation thresholds. Darkfost observes that when prices move counter to heavy short bias, the resulting squeeze can accelerate gains, drawing parallels to the 2024 surge from $54,000 that surpassed $100,000 after shorts faltered.
Broader market resilience supports this view, with Bitcoin’s price having advanced from $16,000 in early 2023 to peaks over $100,000 by late 2024 before settling in the mid-$90,000s in 2025. Funding rates during this period fluctuated between -0.04% and 0.08%, often peaking negatively before reversals.
Funding and Price Behavior
Analyzing funding trends from early 2023 to late 2025 reveals Bitcoin’s upward trajectory persisting through volatility. Negative rates like those seen now typically align with consolidation phases, suggesting reduced speculation. Darkfost explains that prolonged divergence between funding and price often culminates in rebalancing, as forced short exits propel the asset higher.
Source: Darkfost on X
Signal clusters in the chart highlight peaks in late 2024 and mid-2025, contrasting with breakout periods earlier. Today’s neutral stabilization amid shorts points to a brewing shift, as positioning realigns with emerging price strength.
Published by COINOTAG on October 15, 2025. Last updated October 16, 2025.
