Analyst: Index Indicates Market in 'Surrender' Phase with Further Downside Risk

On February 2nd, analyst Axel Adler Jr. noted that the “Bitcoin Futures Funding Rate Index” combines price dynamics with derivative funding flows (maker/taker volume + open interest changes). Since last Friday, the funding rate index has plummeted from roughly 50 to a critical 7.1%—the lower bound of the index’s range and an extreme value over the past month. The sustained price trend since January 28 confirms the ongoing bear market. Critically, the index has fallen below the 45% threshold since January 30, signaling entry into bearish territory per the model’s definition. Historically, a 7.1% reading typically signals a market capitulation zone. For a state transition to occur, the index must rebound above 45% and prices stabilize. Until then, any rebound technically remains a bear market corrective structure. Separately, the “Bitcoin Localized Squeeze Index” (a metric integrating volatility, funding rates, and leverage levels) acts as a comprehensive pressure indicator. During the sell-off that broke below $78,000 on the night of January 31 (last Friday), the index briefly spiked to 92.5. Over the weekend, it stayed in a “tail risk alert” state, meaning all pressure valves (downtrend + elevated volatility + skewed funding flows) activated simultaneously. The current reading of 73 still falls in the “high” range. Historically, the index crossing above 90 often aligns with a local price bottom. If the LSI again surpasses 80 under fresh selling pressure, it will signal a continuation of waterfall-like declines. Together, these two indicators paint a clear picture: the funding rate index is at an extreme low, while the Localized Squeeze Index is at a peak. This is a classic sign of market “surrender”—when pressure hits a limit, the market begins absorbing liquidity shocks.