The longer funding rates remain red, the higher the short squeeze will be.
Bitcoin traded at $79,614 in Asian hours on Friday, down 1.6% over 24 hours but still up 3.3% on the week, having retreated from Wednesday’s high of $81,500, which was the most pressure since late January.
Ether fell 2% to $2,278, dogecoin fell 3.8% to $0.1063, XRP fell 1.7% to $1.38, and BNB fell 0.7% to $638. Solana and TRON held in green territory at $88.14 and $0.3474 respectively. Dogecoin is the only major coin in the red on the seven-day band.
The withdrawal came as US forces fired on Iranian targets following attacks on US naval destroyers passing through the Strait of Hormuz on Thursday, according to reports.
President Donald Trump described the strike as a “love squeeze” in an ABC News interview, said the ceasefire with Iran remains “in effect” and threatened to hit harder if Tehran does not sign a deal soon. Brent crude rose 1.2% to around $101 a barrel. barrel on the escalation, though oil is still down more than 6% on the week as the broader narrative of US-Iran de-escalation continues to hold.
Stocks took a similar break. The MSCI All Country World index fell 0.3% and Asian shares fell 1.2% from a record close, although the region is still on course for a fifth straight week of gains. Wall Street futures were 0.2% higher in early trade, suggesting the pullback is profit-taking rather than a structural reversal.
Bitcoin futures funding rates have now been negative for 67 consecutive days, the longest stretch in 10 years per K33 Research. Funding rates are periodic payments between traders who hold long and short futures positions, with negative funding, meaning shorts pay longs to keep their positions open.
A market where shorts have paid off for two and a half months while price has moved higher is the cleanest setup for a short squeeze, where a sudden price change forces those shorts to close positions and accelerate the rally.
FxPro chief market analyst Alex Kuptsikevich said in a note that bitcoin’s pause this week is not a sign of buyer exhaustion.
“Bitcoin rose to $82,800 on Wednesday, approaching but not breaking through the 200-day moving average of $83,200. From its local highs, the leading cryptocurrency retreated to $81,300 at the time of writing,” he said.
Kuptsikevich added that the daily RSI hit overbought territory above 70 and that the previous three times this happened (August, October, January) were followed by sharp sell-offs. “It is logical that market participants take a breather to assess the situation and gather strength.”
The options market is more cautious. QCP Capital said in a Telegram broadcast that monthly implied volatility remains around 41% and demand for put options continues, suggesting traders are buying bitcoin but continuing to cover their downside.
Elsewhere, research firm XWIN Japan flagged $93,000 as a medium-term target driven by closing the CME futures gap, although the firm warned the move may not be linear and could see a leg lower first.
So far, the trade is setting up around two competing pressures. The negative funding extreme keeps the short squeeze on the table if bitcoin breaks $83,200. Iran’s headlines and overbought RSI keep the door open for another retest of the lower area.
