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Bitcoin ($BTC) experienced a sharp rise yesterday and retested the $76,000 level. However, this attempt failed again, and the $BTC price retreated to the $73,000 level.
One analyst noted that a key data point in the markets indicated a possible bottom formation.
$BTC investors are in a bearish trend, which creates the potential for a squeeze on short positions.
Vetle Lunde, Head of Research at K33 Research, analyzed funding rates in Bitcoin futures on Binance and stated that they remain negative despite recent gains. This increases the potential for short positions to become consolidated and for a price increase to occur.
According to CoinDesk, Vetle Lunde stated that Binance’s $BTC perpetual futures funding rate has been negative for 11 days.
According to Lunde, the fact that funding rates remain negative indicates that, despite the price increase, investors are predominantly continuing to take short positions.
Lunde also emphasized that the increase in open positions (OI) was related to the entry of new short positions.
The 30-day average funding rate has been negative for 46 days. Lunde said this is similar to the trend seen after the FTX crash in 2022 and China’s cryptocurrency mining ban in 2021.
However, Lunde argued that historically, such periods of strong risk aversion can present attractive buying opportunities, as excessive short positions can be forcibly liquidated, potentially triggering an uptrend.
*This is not investment advice.