Bitcoin’s price surged over 12% recently, hitting $95,600, but analysts warn of rising short positions in the derivatives market. Glassnode reports an increase in Open Interest despite a negative funding rate, indicating bearish sentiment among traders. While some caution arises, the potential for a short squeeze could lead to price gains. Current trading sits at around $94,629 amidst a generally bullish market.
Bitcoin’s latest market performance is making waves, with prices surging more than 12% last week, reaching a notable high of $95,600. However, analysts from blockchain analytics firm Glassnode are cautioning traders about the derivatives market. They recently reported that despite these bullish figures, there’s a significant increase in leveraged short positions, suggesting underlying market skepticism.
In a post on April 25, Glassnode noted a considerable rise in Bitcoin perpetual swaps, with Open Interest (OI) jumping to 218,000 BTC, a 15.6% increase since early March. Typically, a climb in Open Interest during a price upswing indicates confidence. But Glassnode points out that this time seems different as short positions are overshadowing the positive price action seen recently.
A troubling sign is the average funding rate, which has dipped to around -0.023%, a negative figure that means short traders are paying long traders. This anomaly occurs when the contract price for Bitcoin is lower than the current spot price, reflecting a noteworthy inclination towards bearish sentiment among traders, even in the face of the recent price swings.
The 7-day moving average of long trade funding premiums also highlights this trend, now at $88,000 per hour, indicating reduced demand for long positions. Still, there’s some optimism from Glassnode, suggesting that this high level of short positions combined with leverage could set the stage for a potential short squeeze, which could ultimately push prices higher if a sudden spike occurs.
As of now, Bitcoin’s trading price is at about $94,629, after a slight retracement of 1.01% since the recent peak on April 25. The cryptocurrency maintained a bullish trend overall, with recent gains of 1.02%, 11.12%, and 8.32% over one day, one week, and one month respectively. With a market cap of $1.88 trillion, Bitcoin continues to dominate the digital asset space, securing its position as the largest cryptocurrency and the fifth-largest asset globally.
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