Analysis: Rally on the Cards as Bitcoin Derivatives Flash Extreme Pessimism

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Analysis: Rally on the Cards as <a href="https://investment-policy.com/btc-usd/">Bitcoin</a> Derivatives Flash Extreme Pessimism

According to Jamie Coutts of Real Vision, the Bitcoin derivatives market is showing extreme pessimism. His Derivative Risk Score recently hit 1, and the 7-day average funding rate for BTC is now among the lowest 3% recorded since 2020.

He believes that previous periods of prolonged funding declines were eventually followed by significant gains, with typical increases of over 43% within 90 days.

Derivatives Data Show Extreme Bearish Positioning

On April 13th, a post on X analyzed Bitcoin’s performance after periods of negative funding. The analysis looked at 14 instances since 2016 where negative funding lasted for at least 20 days. The data showed that, on average, Bitcoin’s price increased by 20.8% in the 30 days following these periods, with positive results in 12 out of 14 cases. After 90 days, the median return was even higher, at 43.5%, and 11 out of 14 instances still showed gains.

Coutts points to three past events that closely resemble the current situation: the 2018-2019 crypto downturn, the market crash caused by the start of the COVID-19 pandemic in 2020, and the fallout from China’s 2021 ban on Bitcoin mining.

Looking back at my investments, I’ve noticed a pattern. After periods where the market was consistently betting against Bitcoin – sometimes for almost two months straight – we’ve seen some really strong bounces. For example, after 48 days of negative funding rates, Bitcoin jumped over 73% in about three months back in 2018-2019. We saw similar gains – around 43.5% – after the big COVID crash, and over 42% following the crackdown on Bitcoin mining in China. It makes me think these negative funding periods might actually present good buying opportunities.

The study found a period of reduced funding lasting 50 days from February to March 2026. This was the third-longest funding shortage observed, surpassed only by similar periods in 2018-19 (83 days) and 2021 (53 days).

Looking back at similar situations, the recent 50-day stretch of negative positioning in the derivatives market feels like it could be setting the stage for a rebound, much like we’ve seen before. As an analyst, I’m watching this closely, as these patterns often precede recovery periods.

Coutts did offer some cautions, noting that his analysis was based on a limited number of episodes. He also pointed out two instances in early 2018, when the market was still developing, where losses reached 38% and 32% after 30 and 90 days, respectively.

He explained that the indicator can’t tell the difference between a temporary dip in the market and a longer, more serious downturn.

Short Pressure Builds As Analysts Debate Market Direction

The recent analysis from Coutts arrives as Bitcoin attempts to stabilize, following market uncertainty caused by the announcement from US Vice President JD Vance that talks between the United States and Iran had broken down without a resolution to their conflict.

Currently, the asset is priced around $71,000. This is down over 16% from a year ago and nearly 44% below its peak price of over $126,000, which it reached in October 2025.

Shortly after Vance made his announcement, a market analyst named Darkfost reported almost $1 billion worth of sell orders on Binance derivatives. This caused funding rates to drop significantly – Coutts noted a rate of -1.73% since April 6 – suggesting the situation is still unfolding.

Darkfost pointed out that when many traders are betting against the market, it often leads to a price increase. However, he cautioned that any gains might not last if the overall market remains sluggish.

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2026-04-13 21:38