Bitcoin faces an increasing likelihood of a short squeeze as persistent negative funding rates coincide with rising prices and growing open interest, according to a new report from research and brokerage firm K3lytics (K33).
The 30-day average bitcoin derivatives funding rate has stayed negative for 46 consecutive days. K33 Head of Research Vetle Lunde noted this duration closely matches the negative funding regime seen during the late 2022 bear market bottom, as reported by The Block.
Lunde identified a specific pattern where rising notional open interest and increasing bitcoin prices occur alongside negative daily, seven-day, and 30-day average funding rates. This setup has historically appeared near consolidation bottoms.
"With recent funding rate compression and the unusually persistent negative regime, we see increasing odds of higher highs and a breakout from BTC's 68-day consolidation," Lunde said.
Historical precedents
K33's analysis shows that only two other periods in recent history have seen longer continuous stretches of negative 30-day funding rates. These occurred from March to May 2020, lasting 63 days, and from June to August 2021, lasting 49 days.
Lunde stated that current crypto-native positioning aligns with these specific conditions. This alignment is why the firm has maintained a bullish outlook on Bitcoin over the past month.
Bitcoin prices have risen approximately 3% over the past week. The asset has gained 23% since hitting a low of roughly $60,000 on February 6, according to data from The Block.
Despite recent gains, the cryptocurrency remains down roughly 41% from its all-time high of approximately $126,000, which was reached on October 6, 2025.