Key Takeaways
Is Bitcoin a Potential Market Bottom?
Yes – buy-sell pressure data indicates a potential bottom, with BTC in a ‘bullish zone’ while short traders face increasing risk.
What is driving the current market divergence?
Institutions and spot investors have briefly become sellers, but rising funding rates and liquidation clusters point to a possible short squeeze.
Bitcoin [BTC] has yet to recover from the sharp drop on October 11, which triggered a broader market decline.
The asset was at $107,510 at the time of writing and was still under selling pressure. However, new market indicators suggest that sellers may be betting on the wrong side.
An influx of aid and strengthening bullish signals could pave the way for a rally, potentially leaving short traders at a loss.
Bitcoin bottom reach?
Buy-sell pressure data from Alpharactal is starting to signal that a potential Bitcoin bottom may be forming.
The chart shows that Bitcoin is still in the green phase – the bullish zone – but is approaching the red phase, where selling pressure typically increases.
Source: Alpharactal
Normally, this would imply that Bitcoin could experience a natural decline. However, analyst Joao Wedson noted a subtle distinction.
“The 2025 cycle looks very different with weaker, more subdued demand, nothing close to the euphoric peaks we have seen in the past.”
He added that, unlike previous market cycles in 2017 and 2021, the current cycle appears more restrained – implying that a potential euphoric phase still lies ahead, which could drive assets higher.
A more intriguing trend is visible in the Bitcoin/Gold chart, which shows Bitcoin continuing to rise against gold, gaining 8% in the last 24 hours.
Source: Alpharactal
This indicates that more capital is flowing into Bitcoin than gold, which notably just recorded its steepest one-day decline in more than a decade.
In an email to AMBCrypto, Farzam Ehsani, co-founder and CEO of VALR, explained that this shift from gold to Bitcoin is expected, stating:
“Investors who take risk off the table in one asset are likely to seek asymmetric benefits in another asset, especially one that continues to be viewed as undervalued and underutilized relative to its potential.”
Institutions and spot investors vary
Institutional and spot investors do not currently share the same bullish sentiment.
Institutional investors via US spot Bitcoin ETFs sold $101.3 million worth of BTC, while retail investors were out an even larger $165 million at the time of publication.
Source: SosoValue
This appears to be a cool-off as both groups were net buyers the day before. Institutional investors collected $477.19 million worth of Bitcoin with no outflows, while spot investors bought $435.37 million.
Complementing the outlook, CryptoQuant data shows a recent increase in Bitcoin’s funding rate. At the time of writing, the overall financing rate had turned positive, rising to 0.0067%, after previously falling below zero.
The gradual alignment of retail, institutional and derivatives activities places short traders at increasing risk.
Short squeeze on the horizon?
The liquidation heat map suggests that the market could soon force short traders out of their positions.
With bullish momentum building, Bitcoin may be gearing up for an upward wave. Since most unfilled orders are currently below the spot price, a rally could trigger a short squeeze, forcing short sellers to exit the market.
Ehsani added that Bitcoin still has a bullish outlook in the first quarter of 2026:
“BTC could reach $130,000 – $132,000 provided market conditions are not further hampered by macro volatility.”
Source: CoinGlass