On-chain information exhibits the Bitcoin funding charges have now hit a 6-month excessive, one thing that would result in a protracted squeeze out there.
Bitcoin Funding Charges At the moment Have A Extremely Optimistic Worth
As identified by an analyst in a CryptoQuant post, BTC funding charges have surged as much as the best for the final six months.
The “funding fee” is an indicator that measures the periodic price that merchants within the Bitcoin futures market should pay one another.
When the worth of this metric is bigger than zero, it means lengthy merchants are paying shorts to carry onto their positions proper now. Such a pattern exhibits a bullish sentiment is extra dominant out there at present.
Alternatively, the funding fee being constructive suggests there are extra shorts out there in the intervening time as they’re paying a price to the longs.
Now, here’s a chart that exhibits the pattern within the Bitcoin funding charges over the 12 months 2022 to date:
The worth of the metric appears to have spiked up over the previous day | Supply: CryptoQuant
As you possibly can see within the above graph, the Bitcoin funding fee is constructive proper now, and has been on the rise in current days.
Through the previous day, the indicator has hit its highest worth for the final six months, suggesting there are a considerable amount of longs open within the futures market proper now.
The final time such excessive values of the metric had been noticed was again in Might, shortly after which the worth of the crypto crashed from almost $40k all the best way right down to $30k.
A “lengthy squeeze” came about out there then. A squeeze is an occasion the place a considerable amount of speedy liquidations happen in an overleveraged surroundings.
In a protracted squeeze, a pointy swing downwards within the value (when funding charges are constructive) liquidates numerous lengthy contracts, which solely amplifies this downswing additional.
This amplified plunge then liquidates much more contracts, and so forth. On this approach, liquidations can cascade collectively and make the worth take a pointy plummet.
Because the Bitcoin funding charges are at excessive constructive values at present, a protracted squeeze is a chance, provided that the worth observes a pointy sufficient lower.
BTC Value
On the time of writing, Bitcoin’s value floats round $20.7k, up 1% within the final week.
Appears like the worth of the crypto has taken a success over the past 24 hours | Supply: BTCUSD on TradingView
Featured picture from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com
