Currently, the Bitcoin funding rate is negative, and open interest has reached an all-time high. This indicates that expectations for further price increases have waned after the sharp rise in the futures market following the presidential election announcement. High open interest suggests potential volatility. On the other hand, these short position bets are increasingly centered on mid-sized exchanges such as OKX, Bybit, and Huobi, suggesting the possibility of a short squeeze as opposed to futures market bets.
For example, before the election results were finalized in the futures market, the funding ratio was negative, and there was a tendency to bet against short positions. However, once Trump was confirmed, there was a large influx of spot buying, and futures traders who were betting against short positions rushed to increase their short cover, resulting in a short squeeze that caused a price spike.
Over the next few days, price growth tended to slow down, and once again, futures traders are inclined to hold short positions. Unlike their bets, however, a large influx of spot buying on a price correction can trigger another short squeeze due to short covering. In conclusion, short position liquidity in the futures market is used as a fuel for price surges in the bull market.
Written by MAC_D
