The return of Bitcoin above $75,000 is met with skepticism: margin traders doubt the price will continue to rise, according to Bloomberg.

Funding rates for perpetual futures have remained negative for about 46 consecutive days, marking one of the longest periods of bearish sentiment in derivatives history, comparable only to the aftermath of the FTX exchange collapse in late 2022.

According to analysts, a significant gap has formed in the market between the positive trend in spot prices and the pessimistic positioning in futures. Such discrepancies often lead to large-scale liquidations.

If prices continue to rise, short position holders will incur losses and be forced to close their positions en masse. This process, known as a short squeeze, can trigger a sharp price spike. The longer the pressure persists, the stronger the price impulse may become.

“Traders are actively increasing short positions, betting against a breakout. This creates conditions where a short squeeze becomes more likely if the upward momentum continues,” said Vetle Lunde, head of research at K33.

Factors Supporting the Asset

Despite traders' skepticism, the leading cryptocurrency has gained about 11% from local lows in April.

The four-hour BTC/USDT chart on Binance. Source: TradingView.

Several fundamental factors are supporting the market:

  • Capital inflow. American spot Bitcoin ETFs are increasingly showing positive fund inflows;
  • Institutional actions. Michael Saylor's company, Strategy, has purchased Bitcoin worth $2.6 billion in just the last two weeks. According to FalconX senior derivatives trader Bohan Jian, these transactions have significantly strengthened the market;
  • Wall Street initiatives. Brokerage firm Charles Schwab announced the launch of spot crypto trading, allowing for an allocation of up to 8.8% of portfolios in digital gold. Morgan Stanley became the first major bank to launch an exchange-traded fund based on the leading cryptocurrency.

Weekly inflow and outflow dynamics from spot ETFs. Source: SoSoValue.

Experts have warned that the abundance of positive news makes short positions vulnerable. Any of the mentioned triggers could spark a surge in volatility and a capitulation of bears.

“A breakout above $76,000 could push BTC to $85,000. Such a rally could catch many off guard,” said Kaiko analyst Lawrence Fraussen.

Resistance and Risks

Bears still have a chance for profit if the upward trend halts. According to Deribit, options market participants are willing to pay high premiums for protection against declines: open interest is concentrated around put contracts with strikes at $60,000 and $50,000.

As the leading cryptocurrency continues to rise, it may face strong resistance. Bohan Jian notes that options dealers using market-neutral strategies are selling the asset on price increases, with their largest positions centered around $80,000.

At the time of writing, Bitcoin is trading around $75,500—40% below its all-time high of approximately $126,000 set in October.

As a reminder, analysts at CryptoQuant warned of the risk of mass profit-taking in the cryptocurrency market.