A Bitcoin (BTC) derivatives market indicator suggests a growing risk of a “short squeeze,” a phenomenon that could trigger a sharp rise in the price of the largest cryptocurrency on the market, experts from analyst firm K33 Research said in a report.

A short squeeze occurs when the price of an asset that has been widely sold short (short selling) suddenly rises, forcing short sellers to buy back those assets to limit their losses. This buyback movement triggers a chain effect that quickly drives up the price.

The warning sign indicated by the analyst firm is the funding rate of Bitcoin perpetual futures contracts (which have no expiration date). This metric indicates the difference between the reference price of the perpetual futures market and the price of the index, which is equivalent to the spot market of the digital asset.

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