Since yesterday, the price of Dogecoin has gone up about 10%. However, there are a lot of long positions on the futures market, which is something to keep an eye on.
After the rally, the dogecoin funding rate returns to very high levels.
Santiment, an on-chain analytics company, said that buyers of DOGE are betting that the price will keep going up because long bets are being started on the futures market.
The important number here is the "Binance funding rate," which shows how much Dogecoin futures contract users on Binance are trading with each other right now in terms of fees.
If this measure is positive, it means that investors who are long are paying more than investors who are short to keep their investments. A trend like this means that most people in the market are optimistic.
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On the other hand, negative numbers show that people are generally bearish in the sector, since there are more short DOGE buyers than long ones right now.
Here is a graph that shows how the Dogecoin Binance funding rate has changed over the last month:
Based on the image above, the Dogecoin funding rate on Binance has recently become very positive since the price of the joke coin has gone up again.
Because of this, traders have jumped at the chance and are hoping that the price rise will continue. As more people bought futures contracts during this recent craze, the price of the asset kept going up, which suggests that these traders' bets have so far paid off.
However, if we look at the past, we can see that $DOGE has not done well when the market was heavily dominated for a long time. As you can see from the image, the last few weeks have seen similar jumps in the Binance funding rate and local highs in the cryptocurrency.
One reason for this trend might be that as more long bets are taken in the futures market, the chances of a long squeeze growing.
A "squeeze" is when a quick change in price causes a lot of people to sell their assets in a short amount of time. This chain of sales only makes the swing bigger, which either makes the rise or crash last longer, based on which side of the market is being hit the hardest.
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When there are a lot of longs, it is easier for them to handle a flood of liquidations than it is for shorts. So, even though Dogecoin is currently moving quickly, any drop in price could cause a long squeeze, which could cause the asset to experience a big loss.
