ZKC Primed for Long Squeeze: Funding Rates Plunge, Open Interest High
ZKC exhibits a high probability of a long squeeze due to its deeply negative funding rates and substantial open interest. The decreasing funding rate trend further exacerbates the risk for leveraged long positions, potentially leading to a rapid price decline.
Key Metrics
Analysis
ZKC Long Squeeze Analysis (2026-01-25)
Currently, the cryptocurrency market is exhibiting a mixed sentiment, with Bitcoin consolidating after a recent rally. Altcoins, however, are showing increased volatility. ZKC stands out with an average daily funding rate of -5.305%, indicating a strong imbalance between longs and shorts. This negative funding means long positions are paying shorts to keep their positions open, placing significant downward pressure on the price.
ZKC's high open interest of $4.93M amplifies the potential impact of a long squeeze. The funding rate is trending downwards, suggesting that more traders are shorting ZKC or that long positions are being closed. The exchange-specific funding rates paint a clearer picture, with Bybit at -7.725%, MEXC at -5.361%, and Aster at -2.830%. This variance suggests Bybit longs are under the most pressure.
A break below $0.15 could trigger a cascade of liquidations, accelerating the squeeze. Key price levels to watch are $0.15 (initial support), $0.14 (secondary support), and $0.12 (major support where significant liquidations are likely). Conversely, a bounce above $0.17 could alleviate some pressure, but the negative funding rate suggests this is unlikely in the short term.
Compared to other potential long squeeze candidates, ZKC has a significantly higher negative funding rate and a reasonably high open interest, making it the most compelling opportunity today. Historical context isn't particularly relevant here; the primary driver is the current funding rate anomaly. It is important to note this kind of negative funding rate is quite rare to sustain for long.
Risk Assessment
The primary risk is a sudden reversal in market sentiment. If Bitcoin rallies significantly, or if positive news emerges regarding ZKC, the short positions could be squeezed instead. A warning sign would be a sharp increase in ZKC's price accompanied by a positive funding rate. Another risk is that the exchanges could alter the funding rate mechanism, reducing the effectiveness of the short squeeze.
Furthermore, the low liquidity of ZKC outside of the named exchanges could amplify volatility. Be cautious of 'fakeouts' where the price temporarily drops only to rebound quickly, potentially triggering stop-loss orders. Always use appropriate risk management techniques, including stop-loss orders and position sizing, to protect your capital.
Trading Strategy
For delta-neutral traders, a potential strategy is to short ZKC on Bybit, where the funding rate is most negative, while hedging with a small long position in Bitcoin or a similar liquid asset. The goal is to profit from the negative funding rate and the potential price decline of ZKC. Enter the short position gradually, averaging in to manage risk. Set a stop-loss above $0.18 to protect against a reversal. Consider taking profits around $0.12-$0.14, depending on market momentum. Alternatively, buy OTM put options to capitalize on the expected price move while limiting upside risk.
Exchange Data
| Exchange | Price | Funding Rate | Open Interest |
|---|---|---|---|
| Bybit | $0.162 | -1.2875% | - |
| MEXC | $0.16 | -0.8935% | - |
| Aster | $0.16 | -0.9433% | - |
Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Cryptocurrency trading involves substantial risk and may not be suitable for all investors. Past performance is not indicative of future results. Always do your own research before making investment decisions.