This left the market in an interesting state: price is relatively flat, cash demand is muted, but derivatives traders remain willing to pay for exposure through perps. It’s the persistence of that willingness, rather than its day-to-day changes, that reflects the true state of the market.
Perpetual futures funding rates are the best indicator of this state. Perpetual contracts have been charging longs every day for a full month, with average daily rates close to one percent. That level of carry is not a blip; it represents a structural cost that accumulates over time.
What matters most is that this steady cost of carrying hasn’t discouraged positioning. Longs continue to pay, which tells us traders are willing to sit through a market that otherwise looks rather stagnant.
Data from CryptoQuant showed that the notional value of OI has hovered in the low $40 billion, which in BTC terms amounts to roughly 370,000 BTC. To put that in perspective, average spot turnover over the last month has been less than 25,000 BTC daily. In other words, the derivatives market carries an overhang equal to more than fifteen days of spot volume.
That ratio shows just how large the imbalance between the system’s leverage and the liquidity available in the cash market is. When that gap is as wide as this, the possibility of outsized moves grows because derivatives flows can overwhelm the slower cash side when positions adjust.
While this doesn’t necessarily guarantee a liquidation cascade, it sets the stage for one if a strong enough catalyst appears.
Spot activity has been soft in the past month. Daily volumes have come down in the past week, and the taker buy/sell ratio remained below 1, meaning that market takers have been net sellers. This contrasts with the futures market, where longs keep paying to keep positions open.
This juxtaposition perfectly illustrates the current state of the market: spot isn’t willing to chase the price higher, but futures are paying to stay in. A split like that often results in range-bound trading. Spot selling absorbs any attempts at a rally, while funding keeps perps tilted longer. Without a strong enough catalyst to break this pattern, the market will continue to drift sideways under the weight of the opposing forces.
Liquidations provide another angle on this imbalance. Over the past month, long liquidations have outpaced short liquidations by about two-to-one, even though the price has not moved significantly. That skew tells us that volatility tends to punish longs. The most severe stress came in late August, when nearly half a billion dollars of longs were forced out in a single day.
Short liquidations have been smaller, with the largest day closer to a quarter of a billion. This pattern shows that longs are not only paying funding to hold positions, but are also more exposed when the tide turns against them.
The past week has been a bit more balanced, with long liquidations only slightly higher than shorts, showing a more even distribution of risk. Still, the broader picture remains one of leverage leaning to the long side, and therefore vulnerability tilted in that direction.
Bitcoin has spent months in a holding pattern with leverage intact and carry costs rising. That combination is unusual because typically high funding rates exhaust longs and lead to position reduction.
The fact that this has not happened points to structural demand for futures exposure, whether from funds, structured products, or market-making operations that cannot or will not unwind. The consequence is a market where time itself becomes a cost. Every day adds to the carry bill, and at some point, that bill either forces traders out or demands that the price move enough to justify it.
For now, the standoff continues. The next directional impulse will not come from slow drift in spot flows or minor changes in open interest; it will require either a shift in funding rates, a surge in cash-side demand, or a shock large enough to force liquidations across the stack.
If funding turns neutral or negative for several sessions, the scaffolding that holds price steady will weaken. If spot takers flip net buyers while funding stays positive, the bid side will finally align with leveraged longs, and price can extend higher. And if neither of those occurs, the longer positive funding persists, the more sensitive the market becomes to any sudden downside move.
