Viewpoint: Bitcoin Funding Rate Drops to -6%, Potential Short Squeeze Conditions Form

Odaily According to reports, Bitcoin once fell to $63,000 following attacks by the US and Israel on Iran. The perpetual contract funding rate dropped to -6%, marking the second lowest level in nearly three months. The last time the funding rate reached this level was on February 6th, when Bitcoin bottomed out around $60,000.

CoinGlass data shows that in the past 24 hours, coin-denominated open interest rose from 668,000 BTC to 687,000 BTC. Over $500 million worth of cryptocurrency positions were liquidated, with long position liquidations exceeding $420 million.

A deeply negative funding rate typically indicates a concentration of short positions, with traders willing to pay a premium to maintain bearish bets. An increase in BTC-denominated open interest alongside a negative funding rate suggests rising market participation with more traders betting on a decline. Bitcoin is currently attempting to recover the $64,000 level.