Bitcoin Price Pullback as Traders Go Bullish on Futures: Long Squeeze Risk?

Bitcoin's price is down but futures traders are turning bullish. According to Glassnode data, perpetual futures funding rates for BTC have turned positive.

A positive funding rate usually indicates that bulls are dominating the market. But as prices decline and the leverage heavily biased toward the long side, the risk for forced liquidation grows. It can result in a long squeeze where a further decline comes from long liquidations as prices drop.

Funding Rates Shift From Bearish to Bullish

In April and the first half of May, BTC funding rates were in the red, meaning traders were betting against BTC even as the price climbed. When BTC pushed higher, those short positions got squeezed out. 

The tone changed by mid-May. Funding rates started moving in the positive territory as traders positioned for more upside. The shift suggests the sentiment has turned positive but the price has not caught up yet.

Bitcoin recently resumed its pullback towards the $75,900 level, and currently trades at $73,666.92 with an increase of 1.92% in the last 24 hours indicating that buyers are struggling to maintain the momentum.

Long Liquidations Rise 

According to CoinGlass data, liquidations worth $104 million took place in the last 24 hours. Of this, over $85 million came from long positions.

This indicates that most of the liquidated traders were BTC bulls. If BTC continues to drop and funding rates are above zero, then more long positions will likely be closed. More long liquidations would accelerate the drop.

Technical Indicators Point to Bearish Momentum

BTC price trades near $73,600 with a short-term bearish bias as it sits below the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs), clustered between $76,430 and $81,226.

BTC fell below the 38.2% Fib retracement at $74,487, which suggests the current downward trend is extending rather than consolidating. 

The Relative Strength Index (RSI) stands at 36.23, indicating bearish momentum, while the Moving Average Convergence Divergence (MACD) remains below the signal line, reinforcing downside pressure. 

On the upside, immediate resistance is seen at the 38.2% Fib retracement at $74,487, with the 50-day EMA at $76,429 and 100-day EMA at $76,690 acting as stronger supply zones above. 

On the downside, immediate support is seen around the former trendline break region near $71,727, ahead of the 23.6% retracement at $68,950; a break below opens the door to deeper losses. 

Also Read: Bitcoin Price Faces Volatility Near $73,000 Support Zone

FAQs:

1. Why is Bitcoin price under pressure despite bullish futures positioning

Bitcoin is under pressure because the spot price has weakened while futures traders remain heavily positioned on the long side. This creates liquidation risk if BTC continues to fall.

2. What does a positive Bitcoin funding rate mean?

A positive funding rate means long traders are paying short traders to keep their positions open. It usually shows bullish sentiment, but it can become risky when prices decline.

3. What is a Bitcoin long squeeze?

A long squeeze happens when falling prices force leveraged long traders to close their positions. These forced liquidations can add selling pressure and accelerate the decline.

4. What are the key Bitcoin resistance levels now?

Immediate resistance is near the 38.2% Fibonacci retracement at $74,487. Stronger resistance is seen near the 50-day EMA at $76,429 and the 100-day EMA at $76,690.

5. What support levels should Bitcoin traders watch?

Bitcoin’s immediate support is near $71,727, followed by the 23.6% Fibonacci retracement at $68,950. A sustained break below this zone may open the door for a deeper correction.