Crowded Short vs Funding Rate

A market condition in which an excessive proportion of leveraged participants are positioned short, typically indicated by a long/short ratio below 0.7 and negative funding; associated with elevated short squeeze risk as shorts face mounting carry costs on positions that are not being rewarded.

A periodic payment exchanged between long and short holders of a perpetual futures contract, calculated to keep the contract price anchored to the spot price; positive funding means longs pay shorts; negative funding means shorts pay longs; typically settled every 8 hours on major exchanges.