After weeks of negative funding rates, Bitcoin perpetual futures have flipped positive — a classic sign that bullish leverage is piling in. But the timing isn't great: Bitcoin pulled back sharply in the last 24 hours, triggering over $104 million in total liquidations, with more than $85 million hitting long positions.
Funding rate turns around
The funding rate for Bitcoin perpetual contracts had been negative throughout April and the first half of May, with some notable negative spikes in April. That meant short positions were paying longs to stay open. This week, the rate turned positive, signaling that leveraged buyers now dominate the market. It's a shift that often accompanies renewed optimism, but it also sets the stage for a squeeze when price doesn't cooperate.
$85 million in long positions wiped out
The pullback that followed the flip was swift. Out of the $104 million in total crypto liquidations, over $85 million were long positions — traders betting on higher prices. That's roughly 82% of the total. When a move goes against a heavily long-biased market, the cascade of forced selling can accelerate the drop. That's exactly what happened here.
Why the setup looks fragile
A high positive funding rate combined with a price decline is a textbook recipe for a long squeeze. In a squeeze, over-leveraged longs get liquidated, which pushes price lower, which triggers more liquidations. The funding rate hasn't had time to reset, so the risk isn't gone yet. If Bitcoin can't hold its ground, the same dynamic could repeat. Traders will be watching whether the funding rate cools off or if the selling pressure continues to build.
The next concrete thing to watch is the funding rate at the next 8-hour settlement. If it stays elevated while price drifts lower, the squeeze risk only grows.
