Analyst warns of downward pressure as futures long positions overheat

Crypto analyst Murphy (@Murphychen888) has warned that overheated long positions in the perpetual futures market could lead to increased downward pressure. In a post on X, the analyst noted that long traders are currently paying short traders approximately $390,000 per hour in funding fees. This figure is significantly higher than the recent seven-day average of $220,000, indicating a clear dominance of long positions. Murphy added that the seven-day average funding rate has remained positive since turning from negative on May 12, with the overheating trend intensifying recently. He explained that the high cost of maintaining long positions could compel some traders to voluntarily close their positions to avoid the expense. If prices fall further and break key support levels, it could trigger a cascade of forced liquidations, amplifying the downward pressure. Murphy advised caution with leveraged trading, noting that futures markets are more difficult to navigate while spot demand and on-chain activity have slowed considerably.