Crypto market recoveries often begin in disbelief, and Bitcoin may be entering that phase now, according to new analysis from CryptoQuant.
Despite a partial rebound in price, many market participants are still unwilling to trust the trend — a dynamic analysts say can precede major upside moves.
Rising Short Positions Signal Deep Distrust
Funding rates, a key sentiment indicator, have stayed negative on Binance for six of the past seven days, sitting near -0.004%. This reflects a clear preference for short positions. Analysts note that bearish sentiment intensified after the sharp sell-off on October 11, with traders expecting another leg down.
However, CryptoQuant argues that this very mistrust could become bullish fuel.
“The longer investors doubt the reversal, the stronger the potential for an explosive move higher,” analysts said, noting the increased risk of a future short squeeze.
They added that liquidations of bearish positions could drive Bitcoin rapidly toward major liquidity zones between $113,000 and $126,000.
Market Structure Resembles Earlier Breakout Setups
Similar patterns were recorded in September 2024 and April 2025, when Bitcoin rebounded sharply after heavy drawdowns. Analysts believe today’s structure mirrors those setups, with sentiment flipped negative just before a strong recovery.
CryptoQuant also recently reported a $12 billion drop in open interest over the past week — another sign of shaken confidence. Yet historically, such periods of mistrust and forced exits often precede expansion phases in crypto markets.
At this stage, sentiment remains cautious, but analysts warn the market could be closer to a decisive move than traders expect.