Multi-day negative Bitcoin funding signals ‘overcrowded’ short trade: Reversal coming?

💡 DMK Insight

Bitcoin’s funding rate is deeply negative, and here’s why that matters: shorts are piling in, but history shows this could lead to a squeeze. With the funding rate indicating heavy bearish sentiment, traders need to watch for potential reversal signals. Historically, when funding rates stay negative for extended periods, it often precedes a sharp price rally as short positions get squeezed. If Bitcoin starts to reclaim key resistance levels, particularly above recent highs, we could see a rapid shift in momentum. Keep an eye on the $30,000 mark as a pivotal level; breaking above could trigger a cascade of short covering. But don’t ignore the risks—if Bitcoin fails to break out and instead continues to trend downward, those shorts could be validated, leading to further downside. Monitor the daily chart for signs of bullish divergence or volume spikes that might indicate a shift in sentiment. The next few days will be crucial for determining whether this bearish positioning leads to a squeeze or a deeper correction.