The data shows that Bitcoin funding rates have fallen on the exchanges, which is a clear sign of the dominance of the shorts in the market.
Bitcoin Funding rates are now negative following the recent market collapse
According to an analyst who was quoted in a CryptoQuant Quicktake postBitcoin’s funding rates are down sharply in the last few months. The “funding rate”It is the metric used to track how often derivative contract holders trade fees with each other.
If this indicator has a positive value, then it indicates that the long-term investors pay a premium for the short-term ones to maintain their position. This trend indicates that the vast majority of investors in the industry are bullish.
A negative metric implies a dominant bearish market mentality, as there are more shorts than longs.
This chart shows how the Bitcoin indicator has changed over the course of the past several months.
According to the graph shown above, Bitcoin’s funding rate has been positive since 2024. There have only been a couple small dips towards the negative until recently. latest crashThe indicator finally reached a notable level of red.
The early positive values are due to the bullish market atmosphere. Investors were betting on the rising price. From the graph, it’s visible that this positive sentiment was the strongest during the rally to the all-time high (ATH) price fueled by the spot exchange-traded fund (ETF) demand.
During the consolidation period that had followed this rally, BTC had seen a couple of notable drawdowns, but they weren’t enough to shake off the bullish mood. Investors now seem to be more bearish on cryptocurrency after the recent crash.
Bitcoin crashed has resulted into a huge amount of long liquidations in the market, triggering what’s known as a squeeze. In a “squeeze event”, a sudden price change causes mass sales, and this in turn increases the market price. The price move is then fueled by a series of liquidations.
The latest event of this kind involved longs. It would therefore be called a “long squeeze”. A squeeze of this type is most likely to impact the more dominant side of a derivatives market. As this power balance has shifted towards the shorts now, it’s possible that the market could instead see a short squeeze in the near future.
Naturally, it’s not necessary that a short squeeze should take place, but if the price ends up witnessing some volatility, it’s possible it may end up punishing the short-heavy market.
BTC price
Bitcoin is slowly recovering from its crash. Its current price of $57.500 has seen a steady rise.
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Source: www.newsbtc.com