Historically:

• 2017–2018: funding was extremely volatile and highly speculative

• 2020–2021: funding stayed strongly positive, the market was overheated, and long squeezes were common

• 2022: low/negative funding came with a major market downturn

• 2023–2024: funding was moderately positive, rising and cooling off in cycles

At the moment, funding is no longer overheated. That suggests long leverage has been flushed out, short-term speculative sentiment has cooled, and the derivatives structure looks more balanced.

This is not an outright bullish signal yet, but it also does not resemble the kind of euphoric extreme seen in 2021. Most likely, the market is in a cooling-off or rebalancing phase rather than being excessively hot or deeply fearful.

Written by Rei Researcher