Bitcoin sets up potential short squeeze as funding plunges to -6%
Analysis
Price Impact
HighThe plunge in funding rates to -6% indicates aggressive short positioning, which, combined with rising open interest and liquidations, suggests a crowded market. this scenario is a textbook setup for a short squeeze if the price begins to rise, potentially leading to rapid upward movement as shorts are forced to cover.
Trustworthiness
HighThe data on funding rates, open interest, and liquidations comes from reputable sources like coinglass, which are standard metrics for analyzing derivatives markets. the connection between these metrics and potential short squeezes is a well-established concept in trading.
Price Direction
BullishWhile the negative funding rate indicates bearish sentiment in the short term, it creates the conditions for a powerful short squeeze. if bitcoin can reclaim key resistance levels like $64,000, the forced liquidation of short positions could drive the price significantly higher.
Time Effect
ShortShort squeezes are typically rapid events. the current setup points to an imminent potential price surge if the conditions trigger a cascade of liquidations.
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Markets Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Bitcoin sets up potential short squeeze as funding plunges to -6% Negative funding rates, rising open interest and liquidations point to crowded positioning and heightened derivatives activity. By James Van Straten | Edited by Shaurya Malwa Feb 28, 2026, 11:00 a.m. Make us preferred on Google BTC Funding Rate (Coinglass) What to know : Perpetual funding rates dropped to -6%, matching the most negative level in three months, signaling aggressive short positioning as bitcoin briefly fell to $63,000. Coin margined open interest climbed to 687,000 BTC, indicating increased participation despite the price swing. Bitcoin is looking to reclaim $64,000 on possible short squeeze after earlier falling to as low as $63,000 following U.S. and Israeli strikes on Iran . At the same time, perpetual futures funding rates dropped to -6%, according to CoinGlass , marking the second lowest level in the past three months. The last time funding was this negative was on Feb. 6, when bitcoin bottomed near $60,000. Perpetual funding rates represent the periodic payments exchanged between traders in perpetual futures markets. When rates are positive, traders holding long positions pay those holding shorts. When rates turn negative, shorts pay longs. Deeply negative funding typically signals aggressive short positioning and bearish sentiment, as traders are willing to pay a premium to maintain downside bets. Meanwhile, coin margined open interest rose from 668,000 BTC to 687,000 BTC over the past 24 hours. Measuring open interest in BTC terms removes the distortion caused by price swings. Rising open interest alongside negative funding suggests growing participation, with an increasing share of traders positioned for further downside. In the past 24 hours, more than $500 million in crypto positions have been liquidated, according to CoinGlass data . The bulk of those liquidations were long positions, which accounted for over $420 million, highlighting the scale of forced selling as prices moved lower. BTC Open Interest (Coinglass) Bitcoin News Funding rate More For You Bitcoin could see further downside risks as Iran attacks U.S. bases across Middle East By Shaurya Malwa | Edited by Omkar Godbole 35 minutes ago Tehran launched waves of missiles and drones targeting Israel, U.S. bases, and Gulf allies, with explosions reported in Dubai, Kuwait, and Bahrain. What to know : An Israeli strike on Iran has spiraled into the broadest Middle Eastern military conflict in decades, with Iran launching missiles and drones at Israel and U.S. bases across the Gulf. The United States has begun what President Trump called "major combat operations" in Iran, targeting its missile, naval and nuclear infrastructure as regional states report intercepted missiles, explosions and closed airspace. Bitcoin has so far held above $63,000 amid the turmoil, but analysts warn that a broader market sell-off when traditional markets reopen could push it toward or below the $60,000 level as it trades more like a risk asset than a safe haven. Read full story Latest Crypto News Bitcoin could see further downside risks as Iran attacks U.S. bases across Middle East 35 minutes ago Oil-linked futures on Hyperliquid surge 5% after U.S.-Israel strike on Iran 45 minutes ago Bitcoin nears $63,000 as U.S. and Israel launch strikes on Iran 4 hours ago Bitcoin slides to $65,000 in weekend sell-off, with solana, XRP, dogecoin down 6% 6 hours ago U.S. Senate Democrats asked Treasury, DOJ to probe Binance's illicit finance controls 12 hours ago Coinbase’s head of litigation says states are 'gaslighting' on prediction markets 13 hours ago Top Stories AI tool catches critical XRP Ledger bug that could have drained wallets Feb 27, 2026 Vitalik Buterin reveals his bold new plan to fix Ethereum’s scaling problem 18 hours ago Citi and Morgan Stanley expand bitcoin and crypto custody, trading and tokenization efforts 15 hours ago Bitcoin ETF holders and treasury firms stack protection against price crash below $60,000, Deribit says Feb 27, 2026 The worst may lie ahead. Bitcoin chart revisits historic pattern. 22 hours ago Punters want crypto: UK Gambling Commission explores how to keep bettors on licensed sites 19 hours ago