Bitcoin’s price was worth watching last week, rising by almost 10% in less than seven days. According to the latest bear chain data, an even longer adventure may lie ahead as funding rates fall to critically low levels.

BTC runs the risk of a miniature squeeze

In a recent Quicktake post on the CryptoQuant platform, cryptocurrency analyst Gaah revealed that Bitcoin funding rates have fallen sharply over the past few days as the price lays the groundwork for a sustained recovery. The relevant indicator here is the Funding Rates indicator, which tracks the periodic fees exchanged between traders in the derivatives market for a specific cryptocurrency (BTC in this case).

A positive funding rate typically means that long investors (investors with buy positions) pay a fee to miniature investors (investors with sell positions) in the derivatives market. On the other hand, when the funding rate is negative (as seen in the current scenario), it means that the periodic commission is rather paid by miniature investors to long investors.

According to data from CryptoQuant, the Bitcoin Funding Rates dropped to around -0.011, the lowest level since early February when the BTC price fell to the $60,000 level. “The market is very ‘easy’ and obvious to trade [the] sales page,” Gaah wrote in the Quicktake post.

From the network’s perspective, a negative funding rate signals that the majority of the market – the bears – are betting on the price of Bitcoin. Historically, however, extremely negative funding rates have proven to be a “contradictory signal”, meaning that the price of the asset tends to move in the opposite direction of the crowd (in this bearish scenario).

When prices begin to rise unexpectedly, several traders may be forced to exit their over-leveraged miniature positions, causing asset values ​​to rise further in a phenomenon known as a “short squeeze.” As crypto analyst Gaah noted in his Quicktake post, the chances of a miniature squeeze are increasing by the day.

“Care should be exercised when positioning in [the] current range, because it represents the area of ​​shopping demand,” concluded the market expert.

Bitcoin price overview

After quite positive results last week, Bitcoin’s price action slowed down a bit this weekend – something that was mainly seen on most weekends last year. At the time of writing, the main cryptocurrency is valued at $73,425, which does not reflect any significant movement in the last 24 hours.

Related reading: Analyst Says XRP Could Rise to Near $20 After 2017 Breakout Signal