On August 21, according to Bloomberg, K33 Research said that signals emerging in the bitcoin derivatives market suggest that the risk of a "bear squeeze" is increasing, which could trigger a sharp rally in bitcoin.
The metric is the funding rate for bitcoin perpetual futures, which helps gauge speculators' long or short sentiment. K33 Research said the seven-day average annualized funding rate through Aug. 20 was the lowest since March 2023, indicating the dominance of bearish bets.
"Perpetual swap fund rates have been negative over the past week, while non-positioned squaring contracts have increased sharply, indicating aggressive short-selling that structurally creates a favorable situation for a short-term squeeze," analysts Vetle Lunde and David Zimmerman at K33 Research wrote in a note.
In this short-term squeeze, unexpected price jumps forced quick money traders to position squaring short positions, thus fueling the price rally further. Sentiment in the bitcoin market has been subdued recently: it posted a loss in August and struggled to stay above $60,000. Meanwhile, global stock market indices have rallied to record highs, while gold has also hit new highs.
K33 Research: Bitcoin derivatives market appears "bear squeeze" red flag, or will trigger a sharp rally in bitcoin
2024-08-21 05:50:10
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