Bitcoin bears face $2.6B trap as BTC funding rate drops: Is a short squeeze brewing?

Written by Marcel Pechmanstaff writerReviewed by Ray Salmondstaff editorWritten by Marcel Pechmanstaff writerReviewed by Ray Salmondstaff editorBitcoin bears face $2.6B trap as BTC funding rate drops: Is a short squeeze brewing? MarketsPublishedJun 5, 2026Bitcoin bears piled into short positions as BTC price slid to $60,000. Will the $2.6 billion in short leverage lead to an upside squeeze? Key takeaways:Over-leveraged Bitcoin short positions between $63,000 and $66,000 have created a potential $2.6 billion squeeze trap for bears.Negative perpetual funding rates indicate that bulls have fully deleveraged, significantly reducing downside risk.The Bitcoin (BTC) crash to $61,100 on Friday wiped out $335 million in leveraged long positions. However, after a 21% decline in Bitcoin's price, bulls might have set a perfect trap as negative market sentiment intensified. Bearish positions built up heavily between $63,000 and $66,000, setting the stage for a potential $2.6 billion short squeeze.Estimated cumulative Bitcoin liquidation at major exchanges, USD. Source: CoinGlassEstimated liquidations for a further 8% drop in Bitcoin to $57,000 from $62,000 stand at $1.2 billion. In contrast, a rally to $66,000 would put $2.6 billion of short positions at risk. This potential squeeze might provide enough fuel to revive buyer confidence following a record-breaking 13-day streak of net outflows from spot Bitcoin exchange-traded funds (ETFs).US-listed spot Bitcoin ETFs daily net flows, USD. Source: SoSoValueThe minor $3 million net inflow on Thursday could represent a temporary breathing room after 15 days of selling that drained $5.1 billion. It remains too early to conclude that momentum has officially flipped in favor of the bulls. Ultimately, if bears kept their leverage low and played conservatively, the actual threat of a massive short squeeze might be minimal.Bitcoin perpetual futures annualized funding rate. Source: LaevitasA neutral funding rate typically ranges between …

Bitcoin bears face $2.6B trap as BTC funding rate drops: Is a short squeeze brewing?

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