The Bitcoin Funding Rate is negative despite BTC’s price increase, indicating a dominance of short sellers. This trend presents a cautionary sign for the sustainability of the current rally. Notably, the Fear & Greed Index reflects bullish investor sentiment with Bitcoin trading around $93,200, up 9% this past week.
The Bitcoin Funding Rate has notably remained negative despite the recent surge in prices, indicating a prevailing dominance of short positions among traders. On-chain analyst Checkmate recently highlighted this trend on X, explaining that the Funding Rate tracks the periodic fees traders in the futures market exchange. A positive reading would typically suggest that long holders are paying more, reflecting bullish sentiment. However, the current negative figure indicates that short positions are predominant, signalling a bearish outlook in the market.
The current chart, published by Checkmate, illustrates a sharp decline in the Bitcoin Funding Rate into negative values, aligning with BTC’s recent recovery rally. This paradoxical situation suggests that, despite the price increase, futures traders are sceptical about the rally’s sustainability. Such bearish sentiment could actually backfire; if demand sustains the uptrend, short positions could face liquidation, potentially amplifying the price rise further.
In his analysis, Checkmate noted the occurrence of significant short liquidations recently, a potential sign of an ongoing short squeeze. Future trends in this area will be crucial for Bitcoin’s price, as more traders pile into bearish bets. Meanwhile, the broader cryptocurrency landscape is displaying bullish sentiment influenced by the recent price rise, as indicated by the Fear & Greed Index.
Currently, the Fear & Greed Index sits at 63, suggesting that greed prevails among investors, reflecting a positive shift in sentiment over the past year. As of now, Bitcoin’s price is hovering around $93,200, showing a healthy gain of over 9% in just the past week. It’s an interesting dynamic where risk and opportunity seem to collide, and it remains to be seen how traders will react as market conditions evolve.
