K33 Warns: Risk of Short Squeeze in Bitcoin is Increasing
<p class="text-left mb-4 ">An unusual pattern has been observed in the crypto derivatives markets for some time. According to research and brokerage firm K33, the persistence of negative funding rates in <a href="https://jrkripto.com/tr/coin/btc" target="_blank" rel="noreferrer" class="text-primary underline">Bitcoin</a>, coupled with increasing open positions and continued upward price movement, is increasingly strengthening the possibility of a "short squeeze" in the market. The latest analysis shared by the company's research director, Vetle Lunde, particularly highlights this contradictory appearance in derivatives data. The 30-day average funding rate for Bitcoin has been negative for a full 46 days. This period perfectly matches the negative funding period seen during the bottom of the 2022 bear market. </p><p class="text-left mb-4 ">Negative funding rates indicate that short positions are more dominant than long positions. However, this situation takes on a different meaning when it occurs in an environment where the price is moving upwards. At this point, the overall positioning in the market becomes critical. Under normal circumstances, during periods of strong bearish expectations, the price is expected to move in parallel. However, in the current scenario, while a significant portion of investors are taking short positions, the Bitcoin price continues to rise. The increase in open positions also supports this trend. Such situations have historically been seen near market lows, followed by strong upward movements.</p><p class="text-left mb-4 ">
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</p><h2 class="text-left text-foreground text-3xl font-bold mb-3 mt-1">What does negative funding mean?</h2><p class="text-left mb-4 ">The funding rate is a key metric in the futures market that shows the balance between long and short positions. Negative funding indicates a high concentration of short positions, with investors paying long position holders. This alone can be interpreted as a bearish signal; however, if negative funding continues while the price is rising, it may mean that the short side is caught in the "wrong position."</p><p class="text-left mb-4 ">According to K33, the current situation points exactly to this. While funding rates remain negative on daily, weekly, and 30-day averages, the upward movement of the price indicates an accumulation of aggressive short positions in the market. This accumulation can trigger forced liquidations when the price rises above a certain level. In such a scenario, purchases made to close short positions can push the price even higher, creating a chain reaction. This process is called a "short squeeze." Lunde notes that similar market conditions have been observed in the past and generally coincide with the end of consolidation phases. He specifically points out that periods of increased open interest, rising prices, and negative funding rates tend to occur near market lows.</p><p class="text-left mb-4 ">According to the data, such prolonged negative funding regimes are quite rare. Negative funding lasted for 63 days between March and May 2020, and for 49 days between June and August 2021. The current 46-day series follows immediately after these two periods, indicating that the current market situation is at a historically significant point.</p><p class="text-left mb-4 ">The Bitcoin price has risen by approximately 3% in the last week. Since reaching the $60,000 level around February 6th, the total increase has reached 23%. Despite this, the asset is still trading more than 40% below its peak of approximately $126,000 recorded on October 6, 2025. When all this data is considered together, it is noteworthy that the price has remained resilient despite the prevailing downward expectations in the market. If this structure is maintained, sharper upward movements may be possible as short positions are squeezed. For this reason, K33 maintains its positive outlook for Bitcoin.</p>
