Bitcoin Price To Witness 'Short Squeeze”

Crypto market is staging sharp recoveries as the funding rates on Bitcoin and many altcoins are still negative, indicating a big short squeeze ahead.

Bitcoin derivatives market is signaling an upcoming “short squeeze” that can lead to a sharp rally in Bitcoin price, with an end of selloff in the largest crypto asset. Moreover, analysts have turned overall bullish due to technical strength in the BTC chart and the latest macroeconomic data.

Bitcoin Price To Witness “Short Squeeze”

Crypto market is staging sharp recoveries as the funding rates on Bitcoin and many altcoins are still negative, indicating a big short squeeze ahead.

According to K33 Research data, the seven-day average annualized BTC perpetual funding rate was the lowest on Tuesday since March 2023 — when US bank failures spooked investors — indicating a prevalence of downside risks.

The report predicts a potential sell-side exhaustion, with a setup indicative of an imminent short squeeze coming soon. The chart illustrates a BTC open interest spike during negative perpetual funding rates.

“Perpetual swap funding rates have averaged at negative levels over the past week, while open interest has sharply increased,” K33 analysts Vetle Lunde and David Zimmerman wrote in a note. “This suggests aggressive shorting, structurally creating a setup ripe for a short squeeze.”

The sharp price jumps will force traders to close their short positions. The rise in short liquidation will fuel upside momentum in BTC price. This could change the overall crypto market direction, increasing the positive sentiment among investors.

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