Bitcoin Short Squeeze Incoming? Funding Rates Just Hit Extreme Levels — The Setup Most Are Missing?

The title says, "Bitcoin shorting has

spiked as traders look to profit off

crypto's downfall." This is this is a

this is important because markets don't

just move on price on price,

they move on positioning. And when

positioning gets extreme, that's when

volatility happens. If you appreciate

deep risk focused breakdowns like this,

not hype, not prediction, but

understanding risk, make sure you

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the time that goes into this breakdown.

So this chart

has two main components. the Bitcoin

price line, which is a candlestick chart

at the top. And then you have the

funding rate bars, the green bars and

red bars vertical underneath it. It's

green, then the little red line going

down, green, and then a bunch of red,

and then the circle around the red.

And funding rate. So that measures a

funding rates in simple terms.

Funding rates measure how much traders

are paying to hold leverage long or

short positions in the futures market.

If the funding is positive, longs are

paying shorts.

You know, long people that are positive

are paying the shorts. People that are

negative, that means most traders are

betting price will go up. If the funding

is negative, shorts are paying the

longs. means that traders are betting

price is going to go down. So now look

at the bars.

The green bars above zero positive

funding.

We are we are bullish.

Red bars below zero negative funding.

Bearish bias.

Deeper the red, the more aggressive the

short positioning. Okay. I guess we

don't want to see the deep red going

down. So now notice something

very important on the right side of the

chart. The red bars are getting very

large.

This means shorting has increased

dramatically.

Look at the circle to the right of the

chart

where it says even larger shorts are

occurring now with a potential mass

liquidation event providing upside to a

major rebound.

This is extreme that's happening right

now.

on the Bitcoin. So look at the left red

circle on the chart. It highlights a

previous spike in negative funding

where the shorting the the shorting was

surging. So what happened next? Price

bounced, right? Remember it's like in

the middle of the chart, right? It was

um sometimes in

October of 2025, the first circle to the

left and then the price bounced. Why?

Because there were too many traders

piled into short positions

the the market becomes fragile. If price

moves even slightly upward shorts are

being

liquidated. So when shorts are

liquidated they are forced to buy. Force

buy pushes price higher that pushes more

shorts into liquidation. This creates a

chain reaction. That is called the short

squeeze.

And in midocctober that's exactly what

happened.

funding spiked negative. Shorts crowded.

Price rebounded sharply.

Now look at the right side where we are.

The red bars are even deeper.

And the chart even says even larger

chores are occurring now and a potential

mass liquidation in bank providing

upside to a major rebound.

That's not a prediction. is a

positioning observation. If the short

positioning now is larger than it was

before the October bounce, that means

the fuel for a squeeze may be even

bigger.

But here's the key.

A squeeze only happens if price stops

falling.

The price continues dropping steadily.

Well, that's not good, right? If price

stabilizes,

the unwind may be violent. So why

fundings matters more than price alone?

Most people only look at price charts,

but the price is a result. It's too

late. That's what they show you most of

the time, right? It's up and down. Oh,

it's down. It's too late. Funding rates

show the pressure

building under the surface. Of course,

you have to understand what pressure is.

You have to understand what funding is.

You have to understand what what what

what futures are.

Well, just tell me what's going to

happen. I don't do that. Think of it

like this.

Price is the weather and funding is the

atmospheric pressure. Extreme pressure

leads to storms.

Right now, pressure is building. When

markets fall sharply, emotions take

over. Fear increases. This is a very

psychological situation.

Retail traders start shorting because

they think it's going lower.

But when everyone believes something is

obvious, markets often punish that

consensus.

That doesn't mean price must go up. It

means risk becomes asymmetric. When

positioning is one-sided, the smallest

spark can trigger a reaction.

So let me be very clear here.

This is not predicting Bitcoin will move

tomorrow.

I want you to understand the risk

structure.

Right now price is risk uh price is

weak.

Sentiment is bearish. Funding is deeply

negative and shorts are crowded.

Crowded trades are dangerous.

They work until they don't. And when

they unwind, they unwind fast.

So let let's walk through how

liquidations work. When traders use

leverage, they borrow money

to increase their position side. If they

are short and price rises, their losses

increase quickly. If losses reaches a

certain threshold, the exchange closes

their position automatically. That means

force buying.

Like you have to buy it. We can't you

can't let it run,

right? Because don't forget, if you're

if you're short a stock or anything,

your loss is limitless because if it

goes up, you're losing money. It's not

going to let it go for forever. Now,

imagine thousands of leverage shorts.

If prices move up 3 to 5%,

it can trigger a cascade. Now, all these

people are short. That's what creates

vertical green candle.

Close your position, take your loss, and

that's it. Otherwise, you're going to

lose all of it.

And of course, a lot of people are

leverage, too. They borrow the money to

to to do this. So, what this could

matter in the bigger picture. Now, let's

zoom out. Bitcoin has historically had

violent sell-offs. Take a look at the

videos that I did a couple of days ago,

and you see the money that could be made

in a year. Violent squeezes, extreme

sentiment swings.

Funding spikes often mark turning points

not because they predict direction

but because they signal imbalance

and markets seeks balance. They want to

be balanced because it can't keep up

forever or down forever. When too many

traders are leaning one way, the market

doesn't need much force to tip the other

direction. So what could trigger

squeeze?

Well, strong daily close, ETF inflow

headlines, a macro headlines,

a dollar weakness again, a large whale

of buying and short taking profit.

Anything that would push the price up

and it doesn't need to be dramatic

because there's a huge amount of

leverage.

You just need to shift momentum

slightly. Boom.

Because there's a huge amount of

leverage. Well, what if it doesn't

squeeze? Well, we'd also have the

opposite scenario. So if price continues

grinding lower slowly shorts will close

profitable over time. In that case

funding would normalize the squeeze

potential would fade. So what matters

now is watching does funding stay

extreme?

Does price stabilize and does volume

increase?

Now extreme funding is not rare in

crypto. Crypto markets are heavily

leveraged. But what matters is relative

comparison.

The chart clearly shows current shorting

is more aggressive than prior short

spikes that led to bounces.

That's a signal, not certainty. It's a

signal. So this is where tail risk

thinking comes in.

Most investors

ignore extreme positioning. They react

only after the moves happen. But

understanding crowd behavior helps you

manage risk.

That's why I tagged the black swan book

below. It teaches you to think about

fragility.

In fact, markets don't break when things

look calm.

They break when leverage is extreme.

Is this capitalation? Well, it's

calculation is capitulation is when

traders emotionally give up and pile

into one direction aggressively. Extreme

negative funding can be part of that

process which we have right now.

But confirmation requires volume spikes,

panic selling, reversal attempts.

Let's watch the early signals.

So what should you do?

Focus on the structure. Right now the

market is fragile.

Fragile means small moves can trigger

large reaction.

Whether the reaction is up or down

depends on momentum from here. But risk

is elevated

and elevated risk means elevated

volatility.

So what to watch out for? Does funding

remain deeply negative? Does price stop

making lower lows? Does open interest

stays high? Does volatility compress

before expansion?

So price fell, shorting exploded,

funding is extreme, crowding is visible.

It doesn't guarantee a rally but it

creates a condition where one can happen

fast and market punishes

crowded trade. That's the reason why the

guy that wrote this book about black

black swans right also wrote and they

are fragile. This is all tied together.

Fantastic book that I read and this

breakdown help you understand the

mechanics. Don't forget to subscribe

if that read is true. Average cost per

kilowatt to mine Bitcoin versus price

already beyond the point of dimissioning

return. Well, it's the the the Bitcoin

I think it's 59,000

the the Bitcoin cost to mine that

Bitcoin. So with 68,000 is still to go.

But look at that amount of leverage.

It's pretty high. It's pretty fast. Now,

if it stays long low like this for a

while, then like I said, it's going to

going to dissipate and then you have

nothing.

But this is I mean you are you are a

member so you saw my video this morning

and the position that I have and and

that thing is up uh was it was down

yesterday

like 11% because of a silver went down.

I mean, I was up and you saw it, right?

I was up 30% on that position at the

beginning of the week and I said, "Well,

let's learn how it moves, right?" And

obviously, so the we had the situation

with Russia and basically they said that

um that well maybe we couldn't start

using the dollar again. Maybe I make a

deal with Trump. That's it. The dollar

is strong. We don't need silver.

The the whole thing collapsed. But now

it's back up again because frankly if

you believe for one second that

inflation is gone.

Take a look at the video I did not too

long ago where Lazard

um put out a book about 4% inflation

next year, not 2%.

And the new guy that they have in Yeah,

sure. is going to lower low rates and

say things about the um the fact that we

don't have a problem with inflation

because AI is going to, you know, take

care of everything and even though we're

spending a lot of money, we're going to

save a lot of money because of

um because of um AI um rationalization.

He wanted the job and he got it. But but

the point is now you're so leveraged

that anything even on silver and Bitcoin

that anything could go sideways.

What else do I have for you?

You saw it here first.

Okay, enough of Bitcoin and silver. Let

me take a look the market itself.

this point

fly breeze the wrong way and will just

lose all of it.

This is interesting

between 2000.

What is this?