Bitcoin is currently hovering around $72,000, exhibiting a consolidation pattern that has both bulls and bears anxious. It lacks both the momentum to break through the $73,000 resistance level and the catalyst to break down below the $70,000 support level.
Short sellers still dominate
Independent crypto analyst Axel pointed out in an article that the funding rate chart for Bitcoin perpetual contracts reveals a key signal: throughout February and early March 2026, the funding rate remained in negative territory, indicating that short positions dominated the perpetual futures market.
Since late January, funding rates have frequently fallen into negative territory. Over the past two weeks, they have remained almost entirely in this area with little upward movement. The most extreme readings occurred on February 28th and 25th, when Bitcoin prices were testing local lows around $64,000 to $65,000. As of March 4th, funding rates remained slightly negative, but the cumulative two weeks of negative values clearly indicate a persistently bearish market position.
Negative funding rates mean that short sellers must pay fees to long sellers to maintain their contracts. This indicates that there is more money betting on a decline than on a rise in the market. This situation can lead to two outcomes: if an upward surge occurs, it may trigger a short squeeze; however, if the decline continues, it simply confirms that the bearish trend is correct.
Leverage is being withdrawn
Leveraged data makes the situation more delicate.
Bitcoin futures open interest, denominated in US dollars, has fallen sharply from a peak of $47.6 billion in October 2025 to $20.8 billion in March 2026, a drop of more than half. Even compared to the interim high of $32 billion in January, it has decreased by about one-third.
As of March 4, open interest stood at $20.8 billion, a level not seen since before the rally began in 2025.
Over the past seven days, open interest has fallen by another 3.2%, indicating that deleveraging is still ongoing, although the pace has slowed significantly.
A decline in open interest as prices fall is a signal of forced or voluntary liquidation, indicating that the market is shedding its burden. This distinguishes the current situation from a typical short squeeze scenario, where lower open interest levels typically mean less fuel to trigger liquidation. In other words, the risk of further downside liquidation is much lower than it was in January.
With fuel running low, Bitcoin may continue its stalemate of "neither rising nor falling" until a specific technical signal emerges, awaiting a new catalyst to break the deadlock. Perhaps it would be a war.
