Elevated Bitcoin Short Funding Rates Increases Chances of Short Squeeze

Bitcoin shorts are currently paying a significant premium to maintain their positions, with funding rates exceeding 21 percent as of about an hour ago. This highlights how crowded the short side of the trade has become. While Bitcoin has been consolidating for several weeks and market conditions can always shift rapidly, I am not suggesting that this alone guarantees a breakout. However, when funding rates reach these elevated levels, it does increase the probability of a short squeeze, as sustained costs can force short sellers to unwind positions under pressure.

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