@donahuecronin

Extreme values in BTC funding rates often indicate overcrowded positioning in the derivatives market. A very high positive funding rate means that long positions dominate, and traders are paying a premium to maintain them. This usually signals excessive bullish sentiment and increases the risk of long squeezes, where sudden sell-offs liquidate overleveraged longs. Conversely, deeply negative funding rates suggest extreme bearishness, where shorts dominate and may become vulnerable to a short squeeze. In both cases, extreme funding rates act as contrarian signals, warning that momentum may soon reverse. Smart traders use these levels as risk management indicators.

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