CryptoQuant analyst sees BTC long squeeze risk as OI falls and funding rises

Open interest in the Bitcoin derivatives market has fallen while long-position funding rates have risen, pointing to a possible long squeeze ahead, according to CryptoQuant analyst Axel Adler Jr. Adler said BTC open interest fell about 3.8% to 318,000 BTC on Aug. 21 from 331,000 BTC on Aug. 31, local time. Over the past 24 hours, positions totaling 2,850 BTC were liquidated, and the derivatives market is now in a deleveraging phase following a short squeeze, Adler said. At the same time, the funding rate stands at 0.00906%, with the eight-hour average at 0.00821% and the 24-hour average at 0.00725%. With the eight-hour average running about 13% above the 24-hour average, short-term crowding in long positions is intensifying, he said. Adler added that if Bitcoin falls below a key support level, it could trigger a cascade of forced liquidations in long positions, resulting in a long squeeze.