According to new data from Glassnode, funding rates across the crypto market have collapsed to their lowest levels since the capitulation phase of late 2022. The sharp decline signals one of the most dramatic leverage resets in digital asset history, following last week’s $20 billion liquidation event that swept through derivatives markets.
The chart shows the median annualized funding rate turning deeply negative across major exchanges, a rare occurrence that typically coincides with fear-driven market flushes. Bitcoin’s funding rate, which tracks the cost of holding perpetual futures relative to spot prices, fell to levels unseen in nearly three years, while the median rate across altcoins also plunged sharply.
Historically, such deep negative funding events have marked cyclical bottoms as overextended long positions are purged and speculative demand evaporates. Analysts note that the current environment closely mirrors the 2022 reset that preceded a multi-month recovery phase.
Glassnode’s heatmap underscores the scale of the deleveraging: large red clusters represent periods of extreme positive funding (bullish euphoria), while the recent blue streak shows the swift return to bearish sentiment. If past cycles are a guide, this funding washout could set the stage for the next accumulation phase.
