By the way, it actually bounced back up.
It rose from yesterday’s low of 1.5u to the current 2.06u, a gain of 40%.
I’ve analyzed it a bit.
I think this was caused by shorts closing their positions and short liquidations, rather than simply being driven up by aggressive buying.
Here’s my take:
1: Funding rate
The funding rate has now recovered to a normal level.
This means bearish sentiment in the market has eased. A recovery in the funding rate could mean either that longs are entering or that shorts are closing their positions. The latter is more likely.
2: Liquidations are clearly skewed toward shorts
Short liquidations over the past 24 hours were close to 500,000u (excluding voluntary stop-losses).
This suggests that the rise was mainly driven by short positions being liquidated, rather than longs actively adding to their positions.
3: Open interest in futures contracts has declined for several consecutive days
Rising prices alongside falling open interest is a classic sign of shorts actively closing their positions or being liquidated. If longs were adding to their positions, open interest should be rising in tandem.
My current view:
There’s no clear signal to short, so I’ll wait and see. After all, the historical charts are right there: it often drops 60–70 points, then quickly recovers within a day or two. What’s different this time is that the funding rate briefly turned negative. I’m not sure whether the market makers are testing support or whether this is a sign that the move is over. $BTW
It rose from yesterday’s low of 1.5u to the current 2.06u, a gain of 40%.
I’ve analyzed it a bit.
I think this was caused by shorts closing their positions and short liquidations, rather than simply being driven up by aggressive buying.
Here’s my take:
1: Funding rate
The funding rate has now recovered to a normal level.
This means bearish sentiment in the market has eased. A recovery in the funding rate could mean either that longs are entering or that shorts are closing their positions. The latter is more likely.
2: Liquidations are clearly skewed toward shorts
Short liquidations over the past 24 hours were close to 500,000u (excluding voluntary stop-losses).
This suggests that the rise was mainly driven by short positions being liquidated, rather than longs actively adding to their positions.
3: Open interest in futures contracts has declined for several consecutive days
Rising prices alongside falling open interest is a classic sign of shorts actively closing their positions or being liquidated. If longs were adding to their positions, open interest should be rising in tandem.
My current view:
There’s no clear signal to short, so I’ll wait and see. After all, the historical charts are right there: it often drops 60–70 points, then quickly recovers within a day or two. What’s different this time is that the funding rate briefly turned negative. I’m not sure whether the market makers are testing support or whether this is a sign that the move is over. $BTW