$BTC Recently, the average financing rate of Bitcoin perpetual swaps has been negative, and short positions in Bitcoin, Ethereum and other major exchanges have surged, indicating a strong bearish sentiment in the market. Cryptocurrency experts warn that the risk of "short squeeze" is rising, which may bring a strong rebound to Bitcoin.
Global stock markets continue to rebound, but cryptocurrencies continue to fall. Bitcoin, the largest cryptocurrency, has fallen by more than 12% in the past month and has now fallen below the $60,000 mark.
However, cryptocurrency analysis agency K33 Research said that the Bitcoin derivatives market shows that the risk of a "short squeeze" is rising, which could bring a strong rebound to Bitcoin.
One of the key indicators is the funding rate of Bitcoin perpetual futures, which is an important tool to measure market speculative sentiment. K33 Research pointed out that in the week ending August 20, the seven-day average annualized value of this rate fell to the lowest level since March 2023, reflecting the strong bearish sentiment in the market.
At the same time, K33 said that in the past week, the number of notional open contracts in the perpetual contract market has increased by nearly 29,000 bitcoins. According to data from HODL15Capital on August 19, the short trading volume of Bitcoin on major cryptocurrency exchanges doubled in a single day to $18.3 billion, and Ethereum leveraged shorts also soared.
K33 analysts Vetle Lunde and David Zimmerman said in the report: "The recent financing interest rate of perpetual swaps has been negative on average, and the number of open positions has increased significantly, indicating that short selling in the market is very aggressive. This structural Changes could trigger a short squeeze."
A short squeeze typically occurs when prices unexpectedly rise, forcing bearish traders to close their positions, further pushing prices higher.
Although global stock markets shrugged off worries about U.S. economic growth and rebounded to record highs, and gold hit a record high, Bitcoin and the broader cryptocurrency market still suffered significant losses in August. Bitcoin has fallen more than 12% this month so far, lagging significantly behind the nearly 1% gain in the MSCI Global Stock Index.
Currently, Bitcoin has fallen below $60,000, with the latest price at $59,695.40.
In addition, some analysts pointed out that the US government may be another major challenge facing the cryptocurrency market. Data from Arkham Intelligence showed that the US government recently transferred $600 million worth of seized bitcoins to the exchange wallet operated by Coinbase Global. Khushboo Khullar, venture capital partner at Lightning Ventures, said that the US government may sell these bitcoins, causing a temporary drop in prices.
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