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Deeply Negative Funding Rates Hint at BTC Bounce

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Deeply Negative Funding Rates Hint at BTC Bounce


Perpetual funding rates have turned negative across major exchanges, signaling that short sellers are paying to maintain bearish positions.

Bitcoin perpetual funding rates on major exchanges have flipped negative, signaling that short sellers now dominate the derivatives market and are paying to keep their positions open.

While negative funding typically reflects bearish sentiment, one analyst is interpreting the current extreme as a potential setup for a short squeeze, arguing that excessive short positioning often precedes sharp upside reversals rather than continued downside.

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Funding Flips Negative as Shorts Crowd the Market

In a February 27 market update, analyst Amr Taha noted that funding rates across major derivatives venues simultaneously moved into negative territory, with Binance at -0.005%, OKX at -0.007%, and Bybit at -0.011%.

Funding rates are periodic payments between long and short traders in perpetual futures, and when they turn negative, it means short sellers are paying longs, reflecting dominant bearish positioning.

Taha also pointed to data from the BTC liquidation heat map showing dense clusters of leveraged positions above the current price, many originating around the $92,000 level. According to the analyst, if Bitcoin pushes higher, those short positions could be forced to close, accelerating upside volatility.

“If macroeconomic conditions improve, the probability of a renewed price pump in the short to medium term increases,” Taha wrote.

They added that historically, heavy short exposure combined with negative funding has often foreshadowed sharp reversals, though the metric alone does not predict direction.

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Meanwhile, retail activity is also ticking up. Nino, a CryptoQuant contributor, indicated that trading frequency among smaller investors has spiked relative to its one-year average, a sign that individual participants are re-entering the market after weeks of caution.

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“The current spike underscores a growing sense of anticipation for the next major market expansion,” explained the analyst.

Whale Flows and Market Structure

In a separate post, Taha tracked roughly 1,700 BTC in positive net inflows from so-called “Octopus” wallets, representing medium-term holders, into Binance. A larger 5,000 BTC inflow from the same cohort on February 2 preceded a drop from above $77,500.

This time, the movement, while positive, is significantly less aggressive, suggesting it may not carry the same bearish force.

“Of course, market reaction also depends on liquidity conditions and broader positioning,” Taha stated. “But strictly from the chart data — the intensity is lower.”

Bitcoin briefly tested $70,000 on February 26 but failed to hold that threshold, settling into a range between $66,600 and $68,600 over the past 24 hours per CoinGecko data, with observers at Glassnode saying that despite the relative stabilization, the BTC market is yet to recover.

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At the time of writing, the flagship cryptocurrency was trading almost 200 bucks below the $68,000 level, down slightly by 0.4% in the last 24 hours and seeing no change over seven days. However, on a 30-day basis, the asset is nearly 24% lower, and it is also about 46% below its October 2025 all-time high.

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US Iran War Nears as FBI Offers $25M for Kidnapped Americans

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US Iran War Nears as FBI Offers $25M for Kidnapped Americans

Tensions between Washington and Tehran escalated further on February 27 after the FBI designated Iran as a State Sponsor of Wrongful Detention. The bureau said it remains committed to returning Americans held captive abroad and bringing their captors to justice.

The FBI highlighted two long-running cases. One involves Robert A. Levinson, a retired FBI special agent who disappeared in 2007 during a trip to Kish Island, Iran. 

The US government continues to offer rewards totaling up to $25 million for information leading to his recovery

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The second case involves Shayan Kazemi, a US citizen who went missing in Istanbul in 2011. The US government is offering up to $200,000 for information leading to his safe return.

What the FBI’s Designation Means

A “State Sponsor of Wrongful Detention” designation signals that the US government believes a country is detaining American citizens unfairly, often for political leverage. It does not automatically trigger military action. 

However, it elevates diplomatic pressure and centralizes recovery efforts under the US Hostage Recovery Fusion Cell.

FBI Info Poster on Robert Levinson Kidnapping. Source: FBI

The move sharply increases political friction. It frames detentions not as isolated incidents but as state-backed tactics.

US Military Posture Tightens

The announcement comes amid heightened military activity in the Middle East. The US has moved advanced fighter jets and additional assets into Israel and the surrounding areas as tensions with Iran rise.

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Officials describe the deployment as a deterrence. Yet markets view the buildup as preparation for a potential escalation if nuclear talks collapse or regional clashes intensify.

Cuba Pressure Adds to Global Risk

Meanwhile, President Donald Trump suggested earlier today that the US could pursue a “friendly takeover” of Cuba

His comment follows weeks of economic pressure on Havana, including oil restrictions that triggered blackouts and fuel shortages.

The combination of Iran escalation and Cuba pressure rattled markets.

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Bitcoin, which had been attempting to recover toward $70,000, fell more than 3% on the day to around $65,000. Traders appear to be reducing risk exposure as geopolitical uncertainty rises.

For now, diplomatic channels remain open. But the language from Washington suggests tensions are entering a more dangerous phase.

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Morgan Stanley Applies US Bank Charter for Crypto Custody

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Morgan Stanley Applies US Bank Charter for Crypto Custody

Morgan Stanley has applied for a de novo national trust bank charter, allowing the bank to hold digital assets on behalf of its clients — a move in rhythm with its recent crypto expansion. 

A public filing with the Office of the Comptroller of the Currency (OCC) shows the application for a bank trust charter was received on Feb. 18 under the name “Morgan Stanley Digital Trust, National Association.” 

More details of the business plan were released on Friday, according to reports from Bloomberg and Forbes, revealing that the Morgan Stanley subsidiary will custody certain digital assets and execute purchases, sales, swaps and transfers to support client investment activities, along with crypto staking. 

Source: Office of the Comptroller of the Currency

A national bank trust charter authorizes a financial institution to engage in fiduciary activities such as trust services, custody and asset safekeeping. “De novo” is a Latin term for “anew,” meaning it is a newly created entity rather than an acquired one. 

This is Morgan Stanley’s first trust charter with a specific focus on crypto and follows 14 de novo bank charter applications in 2025. There are approximately 60 national trust banks supervised by the OCC in the US. 

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Rush for crypto bank charters 

In December, the OCC conditionally approved five applications for crypto-related national trust banks, including First National Digital Currency Bank, Ripple, BitGo, Fidelity Digital Assets and Paxos. 

Stablecoin platform Bridge, owned by payments processor Stripe, said it received conditional approval for a national trust bank earlier this month, which was followed by Crypto.com on Monday.

Related: OCC proposal seeks to settle stablecoin yield debate, clearing way for CLARITY

Days later, Payoneer, a global financial services firm, said it had filed for a national trust bank charter in the US, which could enable it to issue a stablecoin and provide various crypto services.

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Morgan Stanley doubling down on crypto 

Morgan Stanley has accelerated its moves toward crypto in recent months. In January, the Wall Street bank tapped equity markets executive Amy Oldenburg to lead its new crypto unit. 

Job listings on LinkedIn show the $2 trillion investment bank is also looking to expand its crypto team, advertising positions for digital assets strategy director, digital assets strategist and digital assets product lead.

Morgan Stanley also filed to launch spot Bitcoin (BTC) and Solana (SOL) exchange-traded funds in January, and later filed for a staked Ether (ETH) ETF. 

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