Bitcoin has begun to consolidate and recover from last week's deep pullback; after sliding from $106,000 to $80,600 in just 10 days, the price is pushing back towards the $87,000—$90,000 range.
This rebound has reignited discussions about whether Bitcoin has reached a temporary bottom, although a key group of whales continues to reduce their supply.
Key points:
Bitcoin whales and retail investors remain net sellers, but medium-sized holders are continuously accumulating.
The demand for accumulation addresses has reached a record 365,000 Bitcoins, indicating a return of long-term confidence.
Negative funding rates suggest traders are capitulating, potentially driving a short squeeze.
On-chain data shows that the market is being dominated by uneven behavior among different groups. Wallets holding over 10,000 Bitcoins, along with institutional groups holding 1,000 to 10,000 Bitcoins, have been steadily distributing during the downturn, contributing to structural weakness. Retail wallets (holding less than 10 Bitcoins) have also been net sellers over the past 60 days, providing limited support during the decline.
In contrast, medium-sized holders in the 10—100 and 100—1,000 Bitcoin ranges have been continuously accumulating during this correction, absorbing some of the selling pressure.
As the demand for Bitcoin "accumulation addresses" surged to a historical high of 365,000 on November 23 (up from 254,000 on November 1), these groups have become increasingly prominent, reflecting a significant increase in demand driven by conviction.
The interactions among these groups are expected to help stabilize Bitcoin after the initial decline, laying the groundwork for a rebound towards $90,000.
The futures market played a decisive role in the recent crash, as a chain of long liquidations, forced selling, and margin calls pushed BTC significantly into the $80,000 range. Now, futures data indicates signs of exhaustion among leveraged longs.
According to CryptoQuant, traders attempting to go long during the pullback "have ultimately been forced out," with daily funding rates significantly cooling and briefly turning negative. Given that Binance's neutral funding rate is around 0.01%, any drop below this level indicates a dominance of shorts, which typically occurs when traders capitulate in the later stages of a pullback.
Crypto analyst Darkfost warns that if shorts continue to add to their positions while Bitcoin gradually rises, the market may enter a classic "phase of disbelief," setting the stage for a strong short squeeze.
The liquidation heatmap from Hyblock Capital supports this scenario: at the $80,000 level, total long liquidations amount to $2.6 billion; while near $98,000, short liquidations soar to over $8.4 billion. As shown in the chart, the dense liquidity bands at $94,000, $98,000, and $110,000 may create a "magnetic" effect on Bitcoin's price movement.
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Original article: “Bitcoin short squeeze to $90K possible as funding rates turn negative”
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