The Bitcoin derivative market is sending a possible positive sign as the funding rates dropped into the negative range while Bitcoin is still holding above an important short-term support area.

TradingView data shows that Bitcoin is trading around the $74,000 mark on March 16th, and it has risen by approximately 1.6% in the last 24 hours. A top analyst points out that there are increasing bearish positions in the derivative market for this coin. However, they feel the overall pricing structure is stable. 

Source: TradingView

A Potential Short Squeeze

Ali Martinez, a respected crypto market analyst, pointed out that the Bitcoin funding rate has turned negative. Martinez said the funding rate has reset to approximately –0.004%. Historically, this is a level that is seen close to local market bottoms. 

CoinGlass reports that Bitcoin derivative market participants continue to engage heavily, with the overall futures trading volume at about $86.7 billion for the last 24 hours. It rose by almost 130% within this period.

Source: CoinGlass

According to the same data, the total open interest is now approximately $50.67 billion, showing a high level of participation by leveraged traders. Martinez added that before each of those rallies, the market showed excessive short interest. Examples include a rally in December 2022, when BTC price rose from approximately $17,800 to $24,800.

There was also the rally in March 2023, when the coin rose from $20,000 to more than $30,000. Martinez stated that this current market environment is indicative of a “peak fear” reset. Here, traders are hedging for a larger decline even though the broader crypto market conditions appear to be stabilizing.

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Bitcoin Maintains Key Trend Support

Separately, an on-chain analysis by CryptoQuant has shown that Bitcoin is still maintaining support above the 30-day moving average. CryptoQuant’s on-chain analyst, Arab Chain, indicated that the 30-day moving average is approximately $68,661.

In addition, the 90-day moving average is approximately $79,815, and the 200-day moving average is approximately $93,892. According to him, these two metrics indicate that Bitcoin is trading in the transitional phase of a broader market trend.

Source: CryptoQuant

The fact that Bitcoin is trading above the 30-day moving average is indicative of the presence of buying support, even as it is still below the longer-term resistance indicators. Additional metrics from the analysis indicate that the Z-Score for Bitcoin is approximately -0.57.

A negative Z-Score reading can be indicative of a cooling phase (or an accumulation phase) in the market. During this period, investors begin to slowly enter the market after an extended rally.

This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.

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