Crypto Funding Rates Hit Lowest Since 2022 Crash: Strategic Entry Points in a Post-Bear Market

The crypto derivatives market has entered a critical inflection point. Funding rates for Bitcoin (BTC) and Ethereum (ETH) have collapsed to levels last seen during the 2022 bear market, signaling a dramatic reset in leverage and positioning. According to a Cointelegraph report, funding rates for BTC and ETH derivatives hit historic lows over the weekend of October 10, 2025, coinciding with a record $16 billion in leveraged long liquidations triggered by Trump's 100% tariff threat on China. This collapse mirrors the leverage exhaustion observed in 2022, when Bitcoin plummeted 74% and Ethereum fell over 80% in a challenging bear market, as detailed in Glassnode's analysis. However, the current environment presents unique opportunities for strategic entry, particularly as on-chain indicators and institutional flows suggest a potential reversal.

Historical Parallels and Market Dynamics

The 2022 bear market was defined by extreme leverage resets. As reported by Cointelegraph, Bitcoin's funding rates reached their lowest levels since 2022, with over 1.6 million leveraged positions liquidated in a single event dubbed "crypto black Friday." Ethereum's funding rates turned negative during this period, reflecting a surge in bearish positioning, according to CryptoSlate. Today, we see a similar pattern: BTC funding rates have turned negative again, a bullish signal historically tied to market recovery as noted by Coingape, while ETH's rates have spiked to multi-month highs, indicating strong demand for long positions based on data from OKX.

The recent liquidation event, however, has created a unique imbalance. Short sellers now dominate the derivatives market, creating a structural vulnerability. As Axel Adler Jr., an on-chain analyst, observed, "Negative funding rates for Bitcoin suggest short sellers are paying longs to hold positions-a classic sign of oversold conditions." This dynamic increases the likelihood of a short squeeze if prices begin to trend upward, a scenario that could accelerate buying pressure.

Ethereum's Divergence and Institutional Tailwinds

While Bitcoin's funding rates remain volatile, Ethereum's trajectory is more compelling. Data from OKX indicates that ETH's funding rates have surged to multi-month highs, driven by institutional inflows and confidence in its staking capabilities and regulatory clarity. This contrasts with Bitcoin's recent outflows from ETFs, highlighting a shift in capital toward Ethereum's ecosystem.

Ethereum's price action further reinforces this narrative. Despite a sharp drop to $3,800 during the liquidation event, its Relative Strength Index (RSI) has shown divergence-a technical indicator that often precedes reversals, as discussed by Coingape. This divergence, combined with strong on-chain demand, suggests Ethereum may be nearing a bottom. Institutional investors, recognizing Ethereum's role in DeFi and its upcoming upgrades, are likely to continue accumulating, creating a floor for the asset.

Strategic Entry Points: Timing the Rebound

For investors seeking to capitalize on the post-bear market, the current funding rate environment offers clear signals. Here are three key entry strategies:

1. Short-Squeeze Plays: Aggressive short positions in Bitcoin and Ethereum create a high-risk, high-reward opportunity. If prices rebound sharply, short sellers may face margin calls, triggering a self-fulfilling upward spiral. This scenario is most likely if macroeconomic conditions stabilize or Trump's tariff threat recedes.

2. Ethereum's Institutional Premium: With Ethereum's funding rates and staking yields outpacing Bitcoin's, investors should prioritize ETH over BTC. The asset's technical divergence and institutional tailwinds make it a stronger candidate for a near-term rebound.

3. Dollar-Cost Averaging (DCA) into Undervalued Positions: The recent liquidation has wiped out speculative leverage, creating a more balanced market. DCA strategies, particularly in Ethereum, allow investors to accumulate at discounted rates while avoiding the volatility of leveraged bets.

Conclusion: A Post-Bear Market Reset

The collapse of crypto funding rates to 2022 levels marks a pivotal moment. While the immediate pain of liquidations is undeniable, the structural shifts in positioning and institutional flows suggest a market primed for recovery. For strategic investors, the key lies in identifying assets with strong fundamentals and imbalances in leverage-Ethereum, in particular, stands out as a compelling case. As the dust settles, those who act decisively may find themselves positioned for the next bull cycle.