The bitcoin futures market is now showing a historically bullish signal, according to crypto analytics firm IntoTheBlock
A leading analytics firm says the Bitcoin (BTC) futures market is showing a value that has previously marked market bottoms.
IntoTheBlock shows that Bitcoin is experiencing a steep backwardation, a condition in which BTC futures contracts are priced significantly lower than the king crypto’s value in spot markets.
According to the analytics firm, backwardation indicates high selling pressure for Bitcoin over the past two weeks.
Source: IntoTheBlock/Twitter
IntoTheBlock adds that funding rates for Bitcoin are currently in deep negative territory while futures markets are in backwardation, suggesting traders are heavily shorting BTC or betting that the king crypto’s value will continue to fall.
Traders tend to take note of extremely negative funding rates as this sets the market up for a short squeeze.
A short squeeze occurs when market participants borrowing units of an asset at a certain price hoping to sell them at a lower price to make up the difference are forced to buy back assets when trading moves against their bias .
Explains the analytics company,
“Times when futures contracts are in backwardation tend to align with market bottoms, as was the case in March 2020 and May 2021. A similar trend can be observed with strongly negative financing rates. Has bitcoin bottomed out?”
At the time of writing, Bitcoin is changing hands at $16,610, up nearly 7% from its 2022 bottom of $15,546.
Don’t miss a thing – Sign up to receive crypto email alerts straight to your inbox
Check the price action
Follow us on Twitter, Facebook and Telegram
Surf the Daily Hodl Mix
Check the latest headlines
 
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any risky investments in bitcoin, cryptocurrency or digital assets. Please note that you transfer and trade at your own risk and any losses you incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Alexander56891/Sensvector
Comments are closed.