Bitcoin’s Correction May End: Negative Funding Rates Signal Potential Short Squeeze

• Bitcoin’s recent rally: Up 3.9% to $111,057, surpassing short-term resistance at $108k.

• Negative funding rates indicate market disbelief in a recovery, dominated by short sellers.

• Trading volume above average with reduced selling pressure over two days, hinting at potential short squeeze to $116k or higher, per CryptoQuant data.

Discover if Bitcoin’s correction has ended with this 3.9% rally to $111,057. Explore funding rates, market sentiment, and recovery signals for informed crypto investing today.

Is the Bitcoin Correction Over?

Bitcoin correction appears to be easing as the cryptocurrency rallied 3.9% over the past 24 hours, trading at $111,057 at press time. This surge has pushed Bitcoin past the critical short-term resistance at $108,000, signaling a potential shift in momentum if buyers maintain control. Negative funding rates on major exchanges like Binance reflect ongoing skepticism, but this could set the stage for a short squeeze driving further gains.

Source: CryptoQuant

Analyst Darkfost, in a CryptoQuant Insights post, highlighted that Bitcoin funding rates on Binance turned negative, underscoring short sellers’ lead in the market. This disbelief phase often follows sharp corrections, where traders doubt an imminent rebound. However, in derivatives trading, such sentiment can paradoxically fuel upward movement. As prices rise, short positions face liquidation, creating forced buying that amplifies the rally—a classic short squeeze scenario.

Current trading volume has exceeded average levels in recent hours, supporting this price action. Selling pressure has also weakened over the last two days, allowing bulls to regain footing. If this trend holds, Bitcoin could target $113,000 as the next resistance level, with potential extension to $116,000 or beyond in a strong weekly open.

What Are Negative Funding Rates Indicating for Bitcoin?

Negative funding rates mean perpetual futures traders are paying fees to maintain short positions, reflecting bearish bets outweighing bullish ones. According to CryptoQuant data, these rates dipped further after Bitcoin’s recent correction, showing persistent market doubt. This setup, while cautious, often precedes squeezes; historical patterns from 2024 corrections saw similar negativity flip to rallies exceeding 10% within days. Expert Axel Adler Jr noted on X that post-liquidation flushes, like the one on October 10, enable short-term bounces, but sustainable recovery demands spot market inflows and rising open interest. With miners’ profitability holding steady at moderate levels, overall selling pressure is easing, bolstering long-term dynamics.

Source: Axel Adler Jr on X

COINOTAG’s recent analysis pointed to weekend clues of a bullish reversal, including reduced Bitcoin inflows to Binance. Combined with the breach above $108,000, this suggests a near-term bounce to $114,000-$116,500. Long-term, moderate miner profitability alleviates selling, fostering stronger market conditions. Open interest must rise steadily alongside spot demand for confirmation of a lasting uptrend.

Bitcoin’s price action remains pivotal amid broader crypto market volatility. The 3.9% gain marks a promising start, but investors should monitor funding rates and volume for sustained strength. As of October 2025, global economic factors like interest rate expectations continue influencing sentiment, with institutional inflows providing a supportive backdrop per Chainalysis reports.

Trading metrics from platforms like Binance and Coinbase show open interest stabilizing post-correction, a positive sign. If short squeezes materialize, liquidity clusters at $126,000 could draw prices higher, extending the rally through the month.

Frequently Asked Questions

Is Bitcoin’s Recent Rally Sustainable After the Correction?

Bitcoin’s 3.9% rally to $111,057 shows early promise, but sustainability depends on sustained spot inflows and declining selling pressure. CryptoQuant data indicates negative funding rates could trigger a short squeeze to $116k. Monitor volume and miner activity for confirmation, as historical recoveries post-2024 corrections averaged 8-12% gains in similar setups.

What Does Negative Funding Mean for Bitcoin Traders?

Negative funding rates signal more traders are betting against Bitcoin, paying fees to shorts. This often reflects caution after drops, but it can lead to rapid rallies if prices rebound. As noted by analysts on CryptoQuant, this disbelief phase typically resolves with squeezes, boosting prices as shorts cover—ideal for voice searches on market recovery signs.

Key Takeaways

• Market Sentiment Remains Skeptical: Negative funding rates on Binance highlight short seller dominance, but this disbelief could spark a short squeeze toward $116k.
• Price Action Supported by Volume: Above-average trading in recent hours and weakened selling over two days aid the 3.9% rally past $108k resistance.
• Path to Recovery: Steady spot inflows and rising open interest are key; target $113k-$126k if momentum builds, per Axel Adler Jr’s analysis.

Conclusion

The ongoing Bitcoin correction seems poised to conclude with this 3.9% surge to $111,057, driven by negative funding rates and easing selling pressure. As negative sentiment signals potential short squeezes, recovery to $116k appears feasible if volume sustains. COINOTAG, published October 2025, advises monitoring key metrics for confirmation. Stay ahead in crypto—track these developments for smarter investment decisions moving forward.

By COINOTAG Staff | Published: October 2025 | Updated: October 2025