Bitcoin futures open interest has risen to a five-week high while funding rates remain negative, prompting the market to raise the possibility of a new short squeeze.

Cointelegraph reported on April 11 that on-chain analytics firm CryptoQuant assessed that the bitcoin market is currently overcrowded with short positions.

A key backdrop is that derivatives positioning is tilting to the downside even as prices rise. Bitcoin moved above $73,000 on April 10, but exchange funding rates were still negative and open interest increased to $24.2 billion. That is the highest level since early March. CryptoQuant contributor CoinNiel said funding rates remain in strongly negative territory even as bitcoin is leaving exchanges, pointing to conditions in which short positions are concentrated.

CoinNiel said the combination suggests a rapid build-up of leveraged short positions. He explained that negative funding rates have appeared more frequently since March and, in April, have remained negative without turning positive. He added that the recent mild pullback is hard to view as a meaningful deleveraging phase.

Actual liquidation volumes are still not large. Coinglass data showed that total liquidations across the cryptocurrency market in the 24 hours before the time of writing were below $100 million. Short liquidations also remained relatively limited even as bitcoin prices rose. The situation is seen as positions holding up while accumulating, rather than the market entering a rapid short unwind.

Supply and demand sentiment is also shifting gradually. More market participants expect additional gains in bitcoin, and some cited target prices above $80,000. Crypto trader Michaël Van de Poppe (미하엘 반 더 포페) said large speculative players have returned to net buying in bitcoin, and assessed the flow as very similar to just before a major breakout in 2023.

In this flow, the market's next watch points are twofold. One is whether short positions will build further as negative funding rates and high open interest persist, or whether full-scale liquidations will occur during price moves. Current data show a structure in which spot bitcoin outflows and derivatives short accumulation are appearing at the same time, and the outlet said that, in the short term, whether short-position pressure emerges is rising as a variable that will split the price direction.