Bitcoin funding rate turns dark red, short squeeze soon? , Bitcoinist.com – Bitcoinist
On-chain data shows that bitcoin funding rates have sunk into deeply negative values, something that could pave the way for a minor squeeze in the market.
bitcoin funding rate of all exchanges is the red value right now
As pointed out by an analyst in a Cryptoquant post, BTC could be slightly up in the near term due to current funding rates.
The “funding rate” is an indicator that measures the periodic fees that bitcoin futures long and short traders exchange between each other.
When the value of this metric is positive, it means that longs are currently paying a premium to shorts to hold their positions.
Since the markets are longer, such a trend suggests that bullish sentiment is dominating the futures market at this point in time.
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On the other hand, negative values of the funding rate imply that the market is currently overbought, and that the overall sentiment is bearish right now.
The chart below shows the trend of bitcoin funding rates across all exchanges over the past week.
The value of the indicator seems to be less than zero at this time. Source: Cryptoquant
As you can see in the graph above, the bitcoin funding rate has gone down over the past day and is currently holding relatively negative values.
This means that futures traders are accumulating shorts in the market, similar to the trend that happened a few days ago as the chart shows.
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Thereafter, the price reversed sharply upwards and caused a minor squeeze, which further extended the price swing.
A “short squeeze” occurs when a sudden sharp fluctuation in price leads to large-scale liquidations by small traders.
Large liquidations push bitcoin in a reversal direction, flushing out even more leverage. In this way, liquidations cascade together and the phenomenon is called “squeezing”.
As shorts are accumulating in the BTC futures market right now, it is possible that price volatility could lead to such a squeeze, which could lead to some upside for the crypto.
However, as of a few days ago, it is likely that such liquidations will only increase in the short term.
btc price
At the time of writing, bitcoin was priced around $19.2k, down 9% over the past week. The chart below shows the trend in the value of crypto over the past five days.
The price of the coin seems to have fallen in the last few days. Source: BTCUSD on TradingView Featured image of Kanchanara on Unsplash.com, Chart from TradingView.com, CryptoQuant.com
