Exploring the Local Meaning of the Bitcoin Market: Analyzing Market Structure Through Long Liquidations and Funding Rates

Cryptocurrency market analyst Axel Adler Jr.’s latest market analysis suggests that the current Bitcoin futures market is in an extremely unstable phase. As the pressure to liquidate long positions reaches abnormal levels, market participants are seeking a clear formation of “local significance,” but the conditions for that are not yet in place, according to the data.

Overwhelming Long Liquidations: The Extremity Indicated by 97% Liquidation Dominance

Recent data shows that the liquidation dominance of Bitcoin futures longs and shorts has reached 97%, with the 30-day moving average increasing by 31.4%. This indicates that nearly all forced liquidations are originating from long positions, vividly illustrating that buyers are under systematic ongoing pressure.

Typically, when oscillators reach extreme values, they coincide with peaks in forced sell-offs and can potentially bring short-term market stabilization. However, this phenomenon alone does not necessarily indicate the formation of “local significance.” To confirm a sustainable bottom, oscillators need to converge toward zero or the 30-day moving average must turn into a downtrend.

The Hidden Risks Behind Funding Rates: Maintaining Bullish Position Structures

An important point highlighted by Axel Adler is the contradiction that, despite ongoing large-scale liquidations, Bitcoin funding rates remain in positive territory. Data from February shows an annualized rate of 43.2%, but this is significantly lower than the peak levels of over 100% seen from October to November.

A key observation is that negative funding rates have appeared only sporadically over the past month. This persistent positive bias indicates that the overall market demand for long positions remains strong. The fact that funding rates stay positive even amid large liquidations suggests that the market is either rapidly rebuilding leverage or is not yet fully prepared for complete liquidation.

“Surrender Signals” from the Derivative Market Are Essential for Forming “Local Significance”

A full “derivative surrender” requires the funding rate to shift from neutral to negative territory. Currently, this signal has not materialized. The two critical indicators—liquidation dominance and funding rate—paint a picture that strongly suggests leverage reduction has not yet been completed.

While liquidations have dealt a significant blow to long positions, the overall market position structure still maintains a bullish bias. Therefore, the formation of clear “local significance” remains distant, and market participants need to watch for further waves of liquidations and structural changes in funding rates. Until the market’s true bottom is formed, cautious market monitoring will continue to be necessary.