Will BTC break out of its negative feedback loop as bulls become willing to pay a premium again? The directional premium for perpetual contracts is calculated as the total daily funding fees paid by longs to shorts across all exchanges. By adding the 30-day moving average and the 90-day standard deviation as reference points, we can gauge how concentrated leveraged long positions are—and how strong the willingness to pay is. In other words, we’re measuring the intensity of bullish sentiment in the BTC perp market. As we discussed in “Why Are ETFs Losing Buying Power?”, when bullish sentiment, risk appetite, and leverage all decline simultaneously, the market enters a negative feedback loop. To break this cycle, bullish conviction needs to recover first. Related thread: x.com/Murphychen888/status/200...… [Chart 1] Looking at past cases (the red shaded areas), whenever the “longs' premium payment” (green line) drops below the “90-day -1 standard deviation” (red line), market sentiment is extremely bearish. As macro factors shift and confidence slowly returns, the premium paid by longs starts to climb above the 30-day moving average (purple line). This is the best evidence of sentiment shifting from panic to cautious optimism. This shift helps the market escape the “death spiral,” reducing the risk of sharp, deep drops in the short term. Right now, we see the green line has moved from below the red line to above the purple line—a positive signal. It shows the market has shifted from almost everyone expecting BTC to repeat the deep bear of 2022, to at least some traders showing conviction with real positions. This divergence brings “uncertainty” to 2026—meaning the classic 4-year bull-to-bear script might not play out exactly as before. At the very least, there’s room for real price action. [Chart 2] Compare this to the same metric from Feb–Apr 2022 (Chart 2)—a period many cite as a reference. Back then, the longs’ premium was always below the 30-day MA and 90-day STD, showing extreme bearishness. Even during rebounds, nobody wanted to go long—there was zero divergence. Now, with most major macro events for December behind us, all eyes are on the massive options expiry on Dec 26. Once market makers unwind their hedges, how will the new capital structure impact price? If the transition is smooth, everything we’re seeing right now bodes well for January—at the very least, it won’t be one-sided. From a position structure perspective, once low-entry holders have sold off, sentiment recovery will force high-entry bagholders to lock in their positions passively, creating a window for a real turnaround! ---------------------------------------------- Sponsored by @Bitget｜ Bitget VIP: Lower fees, bigger perks.