Bitcoin could be primed for a short squeeze with funding rates hitting a three-month bottom.

Bitcoin is attempting to stabilize near $64,000 as derivatives indicators suggest the market may be primed for a short squeeze. The cryptocurrency briefly slid toward $63,000 following U.S. and Israeli military action against Iran before finding support.

According to data from CoinGlass, perpetual futures funding rates have dropped to roughly -6%, marking the second-lowest level in the past three months. A similar extreme was recorded on Feb. 6, when bitcoin bottomed close to $60,000 before rebounding.

Funding rates are recurring payments between traders in perpetual futures contracts. Positive funding means long-position holders pay shorts, while negative funding flips that dynamic, with short sellers paying longs. Deeply negative readings often indicate crowded bearish positioning, as traders are willing to incur costs to maintain downside exposure.

Meanwhile, coin-margined open interest rose from 668,000 BTC to 687,000 BTC over the past 24 hours. Tracking open interest in bitcoin terms helps remove distortions caused by price volatility. The rise in open interest alongside sharply negative funding suggests increasing participation, with a growing share of traders positioned for further declines.

Liquidation data reinforces the picture of heightened derivatives activity. More than $500 million in crypto positions were liquidated in the past day, CoinGlass data show. Long positions accounted for over $420 million of that total, reflecting significant forced selling as prices fell.

Together, plunging funding rates, expanding open interest and substantial long liquidations point to heavily skewed positioning in the futures market — a setup that can accelerate volatility and potentially trigger a squeeze higher if prices begin to move against short sellers.

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