Emre Yumlu 
Bitcoin retreated to the $63,000 level following military action by the United States and Israel against Iran, triggering a wave of risk-off sentiment across global markets. While the initial move was clearly to the downside, derivatives data now suggests that market positioning may be setting the stage for a potential short squeeze.
A sharp shift in funding rates, rising open interest, and elevated liquidation volumes collectively point to crowded bearish positioning in the futures market.
Funding Rates Drop to -6%
Bitcoin Perpetual futures funding rates fell to -6%, marking the second most negative reading in the past three months. The last time funding reached similarly depressed levels was on February 6, when Bitcoin formed a local bottom near $60,000.
Funding rates represent the periodic payments exchanged between long and short traders in perpetual futures markets. When rates are positive, long positions compensate shorts. When rates turn negative, short sellers pay long holders. Deeply negative funding typically reflects aggressive downside positioning, with traders willing to pay a premium to maintain bearish bets.
Such extreme readings often indicate one-sided sentiment, where a large portion of market participants are leaning heavily in the same direction.
Bitcoin Open Interest Climbs Despite Price Weakness
Over the past 24 hours, coin-margined open interest increased from 668,000 BTC to 687,000 Bitcoin. Measuring open interest in BTC terms removes distortions caused by price fluctuations and offers a clearer view of participation.
The combination of rising open interest and sharply negative funding suggests that new positions are being added, and that a growing share of traders are positioning for further downside. This buildup of short exposure increases the likelihood of a squeeze if price momentum shifts upward.
$500 Million in Liquidations
In the last 24 hours, more than $500 million in crypto positions were liquidated. Approximately $420 million of that total came from long positions, highlighting the scale of forced selling during the recent decline.
With many long positions flushed out and funding rates deeply negative, the market may now be tilted toward excessive short exposure.
$64,000 as a Trigger Level for Bitcoin
Bitcoin attempt to reclaim $64,000 is technically significant. A sustained move above that level could pressure heavily leveraged short positions, potentially triggering a cascade of liquidations and accelerating upward momentum.
Current derivatives metrics reflect elevated risk and crowded positioning. How price responds in the near term will determine whether this imbalance resolves through renewed downside—or a sharp short squeeze.
This content is not investment advice.
You can also freely share your thoughts and comments about the topic in the comment section. Additionally, don’t forget to follow us on our Telegram, YouTube, and Twitter channels for the latest news and updates.