- Bitcoin’s funding rate hits 54%, aligning with previous cycle bottoms before major rallies.
- Altcoin Index remains low at 29, suggesting cautious sentiment and BTC dominance in the current cycle.
- Analysts monitor funding rate’s approach to 80%, a key level tied to correction risks in past cycles.
Bitcoin’s funding rate and altcoin season index are flashing signals about the market’s direction. As Bitcoin trades around $110,000, on-chain data hints at a critical setup. A CryptoQuant analyst shared a chart showing a bullish trend in the 30-day funding rate percentile. When the percentile drops to the 50% range, Bitcoin has historically bottomed and then resumed upward momentum. This happened in September 2023, May 2024, September 2024, and April 2025.
Now, the funding rate stands at 54.8%. This suggests the market may be nearing another accumulation phase. According to Adler, the 80% percentile is the next key level. Surpassing this would reflect excessive market optimism and potential for a correction.
Funding Rate Signals Accumulation Zone
Funding rate percentiles track the cost of holding long or short positions in perpetual futures. High positive rates signal bullish sentiment, while negative rates show bearish bias. In late June, Bitcoin’s perpetual futures funding rate briefly turned negative. This occurred as spot prices jumped from under $100,000 to nearly $108,000. Such divergence between funding rate and price usually indicates a possible upside trajectory.
Negative funding rates mean short traders pay fees to long holders. If prices keep rising, it may trigger a short squeeze. This forces short sellers to close positions, driving prices even higher. Past instances support this idea. In July 2023 and September 2024, similar conditions preceded 80% and 150% price rallies. Currently, a large volume of leveraged short positions sit at the $111,320 price level. CoinGlass data shows roughly $500 million in potential liquidations. This adds fuel for a possible breakout.
Altcoin Season Indicator Holds Below Threshold
Meanwhile, the altcoin season index remains low. It currently reads 29, far below the 75 level that signals altcoin dominance. This suggests that Bitcoin continues to lead the market. The index fell into Bitcoin season territory in May 2025 and has remained there since. It last peaked in altcoin territory near 75 in early 2025.
Source: blockchaincenter
This divergence reveals a cautious appetite for risk outside Bitcoin. Traders are focusing on BTC during periods of macro uncertainty and tighter liquidity. Historically, altcoins usually experience a rally following rallies of Bitcoin. Once BTC breaks above the 80 percent funding rate percentile, it is possible that the altcoins would follow. However, sentiment in the altcoin sector is still cautious at this point.
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Regulatory pressure and lack of institutional demand also weigh on altcoin performance. Unlike Bitcoin, altcoins face more scrutiny from global regulators. Market watchers say funding rate trends offer a near-term lens on sentiment. But altcoin season dynamics reflect broader cycles of risk-on behavior.
As Bitcoin flirts with its all-time high, 80% percentile level will remain crucial for investors. If that level is breached, volatility can be expected across the digital asset market. Stablecoin flows and ETF flows will remain a crucial watch for institutional players to predict the sustainability of bullish momentum.
So far, the data indicates that the crypto market is still in a bullish trend. However, past patterns show that extreme optimism is often followed by a sharp correction. As July continues, funding rates and the altcoin index could probably determine the market’s next move.
