Data shows the Bitcoin funding rate has increased to a relatively high positive value recently, something that could lead to a long squeeze in the market.
Bitcoin Funding Rate Becomes Positive As Open Interest Rises Up
As pointed out by an analyst in a CryptoQuant post, the BTC funding rate has a positive value at the moment.
The “open interest” is an indicator that measures the total amount of positions currently open in the Bitcoin futures market.
When the value of this metric is high, it means there is a large amount of leverage involved in the market right now. Excess leverage usually leads to the crypto’s price turning more volatile.
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On the other hand, low values of the open interest can result in lesser volatility in the BTC market as there isn’t much leverage involved in the futures market.
Now, here is a chart that shows the trend in the open interest over the past week:
Looks like the metric's value has increased recently | Source: CryptoQuant
As you can see in the above graph, the Bitcoin open interest has observed a rise in recent days. This could mean that the crypto may face higher volatility in the coming days.
Another indicator, the “funding rate,” measures the periodic fee that traders on derivatives exchanges pay each other to hold onto their positions. This metric tells us how the open interest is divided between the long and short traders at the moment.