Recovery periods in the crypto market often start with distrust. This is exactly the dynamics that CryptoQuant analysts are now observing. According to them, after the fall and partial recovery of the bitcoin price, the market may enter a phase where investors are not yet ready to believe in a new trend.
Funding (funding rate) is considered one of the most accurate indicators of this behavior. The statement said that on the Binance exchange, which dominates derivatives trading volumes, they have remained negative six out of the last seven days. The rate is now around -0.004%, indicating a prevalence of short positions.
Experts noted that the negative sentiment intensified after the collapse on the night of October 11. Since then, many traders have remained cautious and favored short positions, expecting a new wave of decline, CryptoQuant noted.
“However, paradoxically, the longer this lack of confidence lasts, the stronger the potential for an explosive upward move. If the current bullish trend continues to form, the growing number of short positions could become a powerful fuel for the next stage of growth,” the experts said.
Analysts noted that liquidation of shorts could trigger a short-squeeze and push prices upward, potentially toward key liquidity zones around $113,000-$126,000.
They said similar scenarios have already occurred in September 2024 and April 2025, when the former cryptocurrency was recovering from sharp declines. Now the market is experiencing a similar structure.
Recall, earlier in CryptoQuant said that the open interest in bitcoin decreased by $12 billion in a week.