BTC traders lean bearish, creating short squeeze potential

Despite a recent rise in BTC's price, traders are still heavily favoring bearish bets, according to an analysis. Vetle Lunde, head of research at K33, noted that the funding rate for Binance's BTC perpetual futures has been negative for 11 consecutive days, CoinDesk reported. This indicates that market participants are still betting on a price decline even as prices rise. Lunde also pointed out that an increase in open interest (OI) corresponds with an influx of new short positions. The 30-day average funding rate has now been negative for 46 consecutive days, a trend similar to what was seen during the FTX collapse in 2022 and after China's crypto mining ban in 2021. However, Lunde suggested that such periods of strong risk aversion can present attractive buying opportunities. He explained that an excessive buildup of short positions could be forcibly liquidated, potentially triggering a rally.