After performing poorly throughout the week, Bitcoin’s price experienced a significant augment on Friday, February 13. Over the weekend, the top cryptocurrency appeared to be on track to regain the psychologically significant $70,000 level. Interestingly, recent on-chain data shows that this latest bullish spurt could be the start of at least a short-term rally in Bitcoin’s price.

Is Bitcoin on the verge of a low squeeze?

In the Quicktake post on the CryptoQuant platform, a CryptoOnchain market analyst revealed that the Bitcoin funding rate on Binance, the world’s largest cryptocurrency exchange in terms of trading volume, has dropped to a critically low level – not seen in over a year. The relevant indicator here is the 14-day straightforward moving average (SMA-14) of the BTC funding rate.

Typically, the Funding Rate indicator estimates the periodic fee paid by traders in the derivatives market for a specific cryptocurrency (Bitcoin in this case). When the funding rate is in positive territory, it usually means that long traders (buy traders) are paying a fee to low traders (put traders) in the derivatives market.

On the other hand, a negative funding rate, as is the case today, suggests that payment is passing from low investors to long investors. Data from CryptoQuant shows that the 14-day SMA of the Bitcoin Funding Rate on Binance has fallen to -0.002, its lowest level since September 2024.

As CryptoOnchain rightly pointed out, a deeply negative funding rate, especially one that lasts for over 14 days on average, indicates that bears (low investors) are increasingly betting against the leading cryptocurrency. The market analyst noted that these extremely negative values ​​often correlate with the bottom of pointed downtrends.

CryptoOnchain wrote in the post:

From a chain and market psychology perspective, deeply negative financing rates often serve as a sturdy contradictory signal. Currently, the market seems to be very “overcrowded” in the case of a low position.

Historically, this on-chain trend has often set the stage for a sturdy low squeeze, where a petite price rebound could trigger a cascade of liquidations of rising low positions. This cascade of low liquidations often serves as jet fuel, further driving Bitcoin’s price higher.

Bitcoin price at a glance

At the time of writing, Bitcoin is trading at around $69,000, reflecting an augment of over 5% in the last 24 hours.