BTC Derivatives Bets Spark Warning of ‘Short Squeeze’
Cryptocurrency Research K33 Expects Sharp Bitcoin Price Surges
The measure is a funding rate for Bitcoin perpetual futures contracts, and helps gauge how bullish or pessimistic speculators are. K33 reported that the average seven-day funding rate on Aug. 20 was the lowest since March 2023, when U.S. bank failures spooked investors, suggesting widespread bearish bets.
“The average perpetual swap funding rate has been negative over the past week, while open interest has increased sharply,” K33 analysts Vetle Lunde and David Zimmerman wrote in a note. “This suggests that short selling is rampant, creating a situation ripe for a short squeeze.”
In such a squeeze, sudden price spikes force short-term traders to close their bearish bets, adding momentum to the rally. Bitcoin has been in a negative mood lately, with the cryptocurrency losing ground in August and struggling to hold above $60,000. Meanwhile, global stocks have rebounded to record highs, and gold has hit new highs.
