As bitcoin (BTC) prices approach the $90,000 mark, a sense of euphoria or extreme optimism seems to be sweeping through the market, warning of a potential price pullback ahead.

That’s the latest analysis from Singapore-based crypto trading firm QCP Capital.

“With BTC’s break of key resistance and it’s multi-month range, the market is certainly in a state of euphoria. Perp funding is very elevated and basis yields are at seven-month highs,” QCP Capital said in a Telegram broadcast.

“While we remain structurally bullish, we are cautious of any pullbacks, especially from leveraged washouts,” the trading firm added.

The open interest-weighted funding rates in perpetuals or futures with no expiry have surged to 0.056%, the highest since at least March, according to Coinglass.

It’s a sign that bullish long positions are likely getting crowded, and a slight price pullback could see over leveraged bulls capitulate, closing their longs and inadvertently exacerbating downside pressures in the market. Leverage washouts have been a common phenomenon in previous bull markets, often leading to a sudden double-digit percentage price drops.

An elevated funding rate means perpetual futures are trading at a premium to the spot price. Standard futures contracts are also trading at an annualized premium (basis) of over 15% across all exchanges, including the CME.

The premium represents the return available on the market-neutral cash and carry arbitrage strategy that involves buying the asset in the spot market while simultaneously selling a futures contract.

Per QCP Capital, historically such sharp spikes in the so-called basis yields have not lasted very long.

BTC changed hands at $88,300 at press time, representing a nearly 30% gain in seven days, according to CoinDesk veri. Prices hit a high of $89,622 during the overnight trade.

The price surge since Donald Trump’s victory in the U.S. election held on Nov. 5 has sparked a strong belief among traders that this upward trend will continue unabated. The optimism is reflected in the reactions on social media platform X whenever a potential resistance zone for BTC is mentioned!