K33 Research: The Bitcoin derivatives market shows a "short squeeze" risk signal, which may trigger a sharp rebound in Bitcoin

K33 Research said that signals emerging in the bitcoin derivatives market show that the risk of a "short squeeze" is increasing, which could trigger a sharp rally in bitcoin. The indicator is the funding rate of bitcoin perpetual futures, which helps measure speculators' long or short sentiment. K33 Research said that the seven-day average annualized funding rate as of August 20 was the lowest since March 2023, indicating that bearish bets are dominant. "Perpetual swap funding rates have been negative over the past week, while open interest has increased sharply, indicating aggressive shorting behavior, which structurally creates a favorable situation for a short squeeze," K33 Research analysts Vetle Lunde and David Zimmerman wrote in a report. In such a short squeeze, an unexpected price jump forces fast money traders to close short positions, further driving a price rally. Sentiment in the bitcoin market has been sluggish recently: it has lost money in August and has struggled to stay above $60,000. Meanwhile, global stock market indices have rebounded to record highs, while gold has also hit new highs. (Bloomberg)