Bitcoin Funding Rate Spike Signals Bulls Defending $70K as ETF Outflows Raise Concerns

Bitcoin continued moving closer to a major support zone as traders increased long positions to defend prices near $70,000. Despite recent selling pressure, rising funding rates and stable open interest suggest bullish investors are still betting on a recovery rather than preparing for a deeper collapse.

Market data showed Bitcoin open interest remained relatively steady even as prices moved lower, signaling that many traders are either adding to existing long positions or opening new ones. Cross-exchange funding rates also stayed mostly neutral to positive, showing a slight bullish bias among futures traders.

However, Bitcoin’s failure to hold above $75,000 has increased worries that the market may test lower support levels if buying pressure weakens further.

Retail Traders Increase Dip Buying Activity

Retail investors are increasingly treating Bitcoin corrections as buying opportunities. According to True Retail Longs & Shorts Accounts indicator, long exposure has climbed to around 62%.

Historically, when retail long positioning moved above this level, Bitcoin posted gains seven days later in nearly 82% of cases, with a median return of 3.6% based on 15-minute backtested data over the last three months.

Still, analysts warned that retail traders have also historically faced a higher risk of getting trapped during sharp market swings.

Spot Bitcoin ETF Outflows Add Pressure

While futures traders appear optimistic, institutional demand is showing signs of weakness. Spot Bitcoin ETFs recorded more than $200 million in outflows on Wednesday, bringing total outflows over the last seven days to above $1.5 billion.

Analysts also pointed to a negative Coinbase premium as another warning sign. In the current market, many institutions now gain Bitcoin exposure through ETFs and over-the-counter products rather than direct spot purchases.

Market watchers are also waiting for the US Personal Consumption Expenditures (PCE) inflation report on May 29, which could influence short-term price direction and investor sentiment.