A new data set shows Bitcoin funding rates at exchanges are now negative. This is an indication that shorts are the main force on the market.
Bitcoin Funding rates are now negative following the recent market collapse
Analysts in CryptoQuant Quicktake have pointed this out. postBitcoin’s funding rates are down sharply in the last few months. The “funding rate”It is the metric used to track how often derivatives contract holders trade fees with each other.
This indicator’s positive value means that long investors have to pay more than short investors to keep their positions. 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 short holders than longs.
Here is the chart showing the Bitcoin trend indicator over the last few months for all exchanges:
The graph above shows that the Bitcoin funding rate was positive for the entire year of 2024. Only a few small dips in the negative area occurred until now. latest crashThe indicator finally reached a notable level of red.
The positive value was due to a market that had an optimistic atmosphere, and the investor tried to place bets on price increases. 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. A sharp price swing causes large-scale liquidations in a squeeze. This in turn drives the market price higher. The price move is then fueled by a series of liquidations.
A long squeeze would be the name given to the event, since it involved longs. In general, a squeeze of this type is most likely to impact the more dominant side of derivatives markets. 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’s price is now back up to $57,500.
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Source: www.newsbtc.com
