Bitcoin Derivatives Market Splits as Open Interest Falls and Funding Rises

The Bitcoin derivatives market is showing signs of a split between open interest and funding costs. Since August 21, open interest has fallen by nearly 4%, while funding costs for long positions have increased rapidly.

According to analyst Axel Adler Jr., this combination could leave BTC exposed to a long squeeze if traders start rebuilding leverage while maintaining an increasingly bullish bias.

Falling OI meets rising funding is the trend observed in the derivatives market. The current open interest stands at 318,600 BTC, down from 331,100 BTC on August 21, a decline of 3.8%. Additionally, over the past 24 hours, another 2,850 BTC has left open positions.

The funding rate is currently at 0.00906%, with the eight-hour average sitting at 0.00821% and the 24-hour average at 0.00725%. The shorter-term average is already 13% above the 24-hour figure, indicating a stronger preference for long positions among active traders.

'The shorts have already been burned. Now the longs are in the crosshairs,' noted Adler.