Bitcoin Funding Rate Turns Negative as Shorts Pile In at $75K: BTC Short Squeeze Brewing?

Bitcoin hit a 24-hour high of $75,886 before pulling back to $74,025, rejected at the $75,000 level again, and the conditions surrounding this attempt look nothing like before.

Analyst Michaël van de Poppe flagged the setup in a thread published today. Yes, a shooting star candle formed on the daily timeframe after the latest rejection. But van de Poppe says that is not the indicator people should be watching.

“The funding rate is negative,” he wrote. “This means people are overleveraged short while we’re attacking resistance.”

Shorts Are Piling In at Exactly the Wrong Moment

Open interest has increased significantly over the past few days, meaning more traders are actively building short positions at the $75,000 level, betting on another rejection.

That worked on the first test. It worked on the second. The third test might be different.

Van de Poppe argues the breakout potential is significantly higher this time around, with $85,000 to $88,000 as the next major resistance zone if Bitcoin clears $75,000.

CoinGlass liquidation data shows the heaviest short clusters concentrated between $76,000 and $78,000 – meaning any sustained move above current levels could trigger a cascade of forced buybacks.

The Supply Side Is Telling the Same Story

Cryptoquant analyst Darkfost published data today that adds a structural dimension.

Wholecoiners – investors holding at least one full Bitcoin – are sending historically low volumes to exchanges. On Binance, the monthly average now stands at approximately 6,000 $BTC, comparable to 2018 levels and far below the 15,400 $BTC recorded at the 2021 peak.

At a global level, transfers of at least 1 $BTC to exchanges have dropped to around 27,500 $BTC – compared to 80,000 $BTC at the 2018 peak, nearly three times lower.

Darkfost attributes this to three factors: rising prices making it harder to hold a full Bitcoin, the introduction of ETFs in 2024 offering exposure without direct ownership, and a growing preference for long-term holding.

The combined effect, as Darkfost notes, is “reduced selling pressure and a gradual transformation of market structure, with a growing share of supply becoming increasingly illiquid over time.”

What Needs to Hold

The key level to watch is $72,000. As long as Bitcoin holds above it, the setup favors longs over shorts.

Bitcoin is currently trading at $74,025, holding above that floor for now.

Shorts are crowded at resistance. Supply hitting exchanges is near historic lows. The third test of $75,000 has a different character than the first two.