Bitcoin Funding Rate Plunges: Potential Short Squeeze Looms

The recent drop in the Bitcoin funding rate to below -6% has sent shockwaves through cryptocurrency markets, sparking concerns of a potential short squeeze.

As reported by CoinDesk, citing data from CoinGlass, the annualized funding rate for perpetual futures contracts has reached its most negative level in three months. This extreme metric signals bearish excess and raises the possibility of a violent short squeeze if Bitcoin's price finds upward momentum.

The current market environment mirrors conditions observed on February 6, when BTC tested the $60,000 support level before staging a recovery. Historical patterns may be repeating, suggesting that a sharp reversal could be imminent.