Dogecoin has seen a rise of about 10% during the past day, but longs are piling up on the futures market, which may be something to keep an eye on. Dogecoin Funding Rate Attains Highly Positive Values After Rally As explained by the on-chain analytics firm Santiment, DOGE traders are betting on the price rise to continue as long positions are being opened on the futures market. The indicator of interest here is the “Binance funding rate,” which keeps track of the periodic fee that Dogecoin futures contract holders on Binance are exchanging with each other right now. When the value of this metric is positive, it means the long investors are paying a premium to the short ones in order to hold onto their current positions. Such a trend implies the majority of the market holds a bullish sentiment. Related Reading: Bitcoin NVT Remains Bullish, All-Clear Signal For Rally? On the other hand, negative values imply a bearish mentality is the dominant force in the sector as the DOGE short traders are outweighing the longs at the moment. Now, here is a chart that shows the trend in the Dogecoin Binance funding rate over the past month: The value of the metric appears to have been positive in recent days | Source: Santiment on X As displayed in the above graph, the Dogecoin funding rate on Binance has turned highly positive recently as the latest rise in the meme coin’s price has taken place. This implies that speculators have jumped onto the opportunity and are betting on the price rise to continue. Since the longs have started piling up in this latest futures mania, the asset has only continued to trend up, suggesting that the bets of these traders have paid off so far. However, if history is anything to go by, the market being heavily long dominated has generally not ended well for DOGE. From the chart, it’s visible that similar spikes in the Binance funding rate coincided with local tops in the cryptocurrency during the last few weeks. The reason why such a pattern may exist is that as the futures market accumulates long positions, the chances of a long squeeze taking place become significant. A “squeeze” refers to an event where a sudden swing in the price unleashes a cascade of liquidations on the sector. This cascade of liquidations only makes the swing sharper, thus extending the rally/crash (depending on which side of the market is taking the brunt). Related Reading: Bitcoin Bearish Signal: Exchange Inflows Hit $1.2 Billion In Past Month When longs are much more in number, such a waterfall of liquidations is naturally easier on their side as compared to the shorts. Thus, while Dogecoin is riding on some sharp momentum right now, any pullback might result in a long squeeze, which could lead to the asset registering a notable drawdown. DOGE Price Following the latest rally, Dogecoin has surged towards the $0.087 level for the first time since April. DOGE has observed some rapid growth in the past day | Source: DOGEUSD on TradingView Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Santiment.net
