The cryptocurrency market is in a phase of distrust, despite the recent rise in Bitcoin’s price. Analysts at CryptoQuant point out that such periods often serve as a starting point for further market recovery, as investors are not yet ready to support the new trend and remain cautious.
This is reported by Finway
Negative Funding and the Advantage of Short Positions
One of the key indicators of market sentiment is the funding rate. At the largest derivatives exchange, Binance, the rate has remained negative for six of the last seven days, currently sitting at around -0.004%. This indicates that the majority of traders are opening short positions, anticipating further declines in Bitcoin’s value.
Following a sharp drop that occurred on the night of October 11, pessimistic sentiments have intensified in the market. Many traders have remained cautious, favoring shorts and doubting the sustainability of the current rise.
“However, it is paradoxical that the longer this distrust lasts, the stronger the potential for an explosive upward movement. If the current bullish trend continues to develop, the increasing number of short positions could become powerful fuel for the next growth phase,” the experts stated.
Probability of a Short Squeeze and Historical Parallels
Analysts note that a prolonged advantage of short positions could lead to a short squeeze—a mass liquidation of shorts that could sharply push prices upward. In this case, Bitcoin could reach key liquidity zones in the range of $113,000–$126,000.
A similar situation was observed in September 2024 and April 2025, when after significant downturns, Bitcoin demonstrated a rapid recovery. The market is currently showing similar structural signs.
Previously, CryptoQuant also noted that open interest in Bitcoin had decreased by $12 billion over the week, which is another factor contributing to heightened caution among market participants.