Key Takeaways
What is the market sentiment like at the moment?
The negative funding rates showed that market participants lacked confidence in a potential Bitcoin rally. A short squeeze could push prices to $116,000 or even higher.
Is the current price increase accompanied by high demand?
It was still too early to say anything about that, but trading volume has been above average in recent hours. The weakened selling pressure over the past two days also helped.
Is the Bitcoin [BTC] correction over? Over the past 24 hours, Bitcoin is up 3.9% and at the time of writing, it was exchanging hands at $111,057.
The climb past the short-term resistance zone at $108,000 was a good start to the week, if the bulls can keep this form going.
The market could be incredulous about a possible recovery. In a message at CryptoQuant Insightsanalyst Donkerfost noted that BTC funding rates on Binance were negative.
It was a sign that short sellers were still leading the market.
After such a rapid correction, the market generally remains unsure whether recovery is possible. This phase of disbelief is currently visible in negative financing rates.
Ironically, this disbelief in the derivatives market could fuel the recovery.
A higher price forces short sellers to liquidate or close their positions at a loss, and these market purchases fuel higher price appreciation. It would result in a short squeeze.
A rally to $113,000, the nearest magnetic zone, was already in the works. An explosive start to Monday could set a bullish tone for the rest of the week, potentially leading to a rally into the next liquidity cluster at $126,000.
What’s next for Bitcoin?
In a recent report, AMBCrypto pointed out that there was evidence of a bullish reversal over the weekend.
The reduced BTC inflows into Binance, combined with the price move past $108,000, meant that a jump to the $114,000-$116,500 zone is likely in the coming days.
In the long term, miners’ profitability, while subdued, meant that overall selling pressure was somewhat alleviated and market dynamics strengthened.
In one message on Xanalyst Axel Adler Jr detailed how the market is still in a pullback mode. After the liquidation wave on October 10, short rebounds are possible.
A sustainable recovery requires a steady inflow into the spot market, as well as a proportionate increase in Open Interest.