Bitcoin Funding Rate Turns Highly Positive, Long Squeeze In The Making?

Knowledge reveals the Bitcoin funding charge has elevated to a comparatively excessive constructive worth just lately, one thing that might result in a protracted squeeze available in the market.

Bitcoin Funding Fee Turns into Optimistic As Open Curiosity Rises Up

As identified by an analyst in a CryptoQuant post, the BTC funding charge has a constructive worth in the mean time.

The “open curiosity” is an indicator that measures the entire quantity of positions at present open within the Bitcoin futures market.

When the worth of this metric is excessive, it means there may be a considerable amount of leverage concerned available in the market proper now. Extra leverage often results in the crypto’s value turning extra risky.

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Alternatively, low values of the open curiosity may end up in lesser volatility within the BTC market as there isn’t a lot leverage concerned within the futures market.

Now, here’s a chart that reveals the development within the open curiosity over the previous week:

Seems just like the metric's worth has elevated just lately | Supply: CryptoQuant

As you may see within the above graph, the Bitcoin open curiosity has noticed an increase in current days. This might imply that the crypto might face increased volatility within the coming days.

One other indicator, the “funding charge,” measures the periodic price that merchants on derivatives exchanges pay one another to carry onto their positions. This metric tells us how the open curiosity is split between the lengthy and quick merchants in the mean time.

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The beneath chart reveals how this indicator’s worth has modified through the previous seven days.

The worth of the indicator appears to have been inexperienced just lately | Supply: CryptoQuant

From the graph, it’s obvious that the Bitcoin funding charge has a comparatively excessive constructive worth at present. Which means that there are the next variety of longs current available in the market proper now.

Since lengthy merchants are paying a premium to maintain their positions (which is why the speed is constructive), the general market sentiment is leaning in the direction of bullish.

Nevertheless, with the excessive open curiosity values, it’s attainable that any massive swing within the value may cause what’s known as a “lengthy squeeze,” which is an occasion the place mass liquidations of lengthy positions cascade collectively and push the worth additional down.

BTC Value

On the time of writing, Bitcoin’s value floats round $20.9k, down 2% within the final week. Over the previous month, the crypto has misplaced 5% in worth.

The value of BTC has climbed up over the previous couple of days | Supply: BTCUSD on TradingView

Featured picture from Aleksi Räisä on Unsplash.com, charts from TradingView.com, CryptoQuant.com