Bitcoin Derivatives Market Signals Long Squeeze Risk Amid Open Interest Drop

The Bitcoin derivatives market is showing an unusual split, with open interest declining by nearly 4% since August 21. During this period, funding costs for long positions have increased sharply.

This combination has led analyst Axel Adler Jr. to warn that it may leave BTC vulnerable to a long squeeze if traders rebuild leverage while maintaining a bullish bias. This scenario could lead to higher market risk and volatility.