K33 Research, the popular crypto market analytics platform, noted that the Bitcoin derivates data points out the growing risk of a major “short squeeze” which can lead to a sharp bounce back in the Bitcoin price to $70,000.
To confirm its analysis, K33 Research pointed out the funding rate for the Bitcoin perpetual futures that helps to gauge either the bullish or the bearish sentiment.
As per the platform, the seven-day average annualized BTC funding rate as of Tuesday, August 20, has been the lowest since March 2023, at around minus 2.5%.
In a note to investors, K33 analysts Vetle Lunde and David Zimmerman wrote:
“Perpetual swap funding rates have averaged at negative levels over the past week, while open interest has sharply increased. This suggests aggressive shorting, structurally creating a setup ripe for a short squeeze.”
Will Bitcoin Catch Up With Global Markets and Gold
The Bitcoin price has struggled to seek enough bullish support to sustain past the $60,000 level. After the early week rally, BTC is once again down over 2% trading at $59,672 as of press time.
On the other hand, the US stock indices have been surging higher with Gold hitting a fresh all-time high above $2,500 this week. Thus a Bitcoin short squeeze might help the largest crypto asset class close the gap with stocks and Gold.
The derivatives data from Greeks.Live shows that BTC options block trading has been on the rise recently with traders selling the call options and buying the put options. Also, the implied volatility has dropped under 50% highlighting strong bearish sentiment from options traders, for the month of August.
BTC Open Interest Shoots, Bitcoin Derivates Data Showing This
The K33 Research analysts also noted that the notional BTC open interest in the perpetual market has surged nearly 29,000 Bitcoin over the past week. Moreover, as of August 20, the
The K33 Research analysts also noted that the notional BTC open interest in the perpetual market has surged nearly 29,000 Bitcoin over the past week. On the other hand, the BTC funding rate has turned negative. Analysts Lunde and Zimmerman highlighted that this combination of rapidly rising open interest and a negative funding rate is an uncommon occurrence in the market.
Recently, the Bitcoin price movement has been much in tune with the global macro developments. Thus, all eyes will be on the FOMC meeting scheduled on Wednesday, August 21, as investors eagerly await the Fed commentary following it. Fed Chair Jerome Powell is likely to hint at the rate cuts moving forward. Analysts are predicting a 25 bps or 50 bps rate cut in the next month of September.