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Bitcoin is increasingly set up for a potential “short squeeze” after open interest reached five-week highs and exchange funding rates remained negative, according to on-chain analysis cited in a new report.
CryptoQuant said in a “[Quicktake]” blog post that Bitcoin was “crowded” with short positions. The analysis highlighted that after BTC/USD moved above $73,000 on Friday, traders appeared positioned to trap market participants betting on further upside.
CryptoQuant pointed to two conditions: negative funding rates on exchanges and rising open interest. Open interest climbed to $24.2 billion, the highest level since early March.
CryptoQuant also noted that negative funding has been more frequent since March and has stayed in negative territory throughout April without flipping positive. The post said this suggests short positions dominate the market, with shorts paying longs, and that such positioning can act as a trigger for a reversal through forced liquidations.
CoinNiel summarized that the combination of rising open interest and negative funding rates indicates leveraged short positions have been rapidly accumulating. CoinNiel added that a slight decrease in the indicators did not yet signal a meaningful deleveraging phase.
Another contributor, Gaah, said funding rates had reached their deepest negative value since Bitcoin’s dip to multiyear lows at the start of February. Gaah cautioned that the current trading range represents an area of buying demand.
The analysis suggests that if the market reverses, the crowded short positioning could increase the risk of forced liquidations, which can intensify upward price moves. One of the cited contributors described the likelihood of a short squeeze as “increasing,” while also noting that caution is warranted when establishing positions in the current range.

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