Key takeaways:
Bitcoin trades within a narrowing range between $91,000 and $94,500 over the last three days.
A rare divergence between rising open interest and negative funding rates could set up a short squeeze.
BTC price must establish $95,000 as new support to continue the uptrend.
Bitcoin (BTC) price has been consolidating within a tight $91,700- $94,490 range since April 22. However, expert opinions and indicators suggest that Bitcoin’s choppy price action could soon end. The key question remains when Bitcoin will break out of consolidation.
BTC funding rates hint at potential short squeeze
One of the most significant signs that consolidation will end soon is the presence of negative funding rates in its futures markets.
While the recent recovery in Bitcoin price was accompanied by a 15% rise in open interest, average funding rates declined, suggesting rising short interest.
Bitcoin’s funding rates dropped to as low as -0.023% as the price tapped $94,700. This indicates a growing bias toward short-side positioning, indicating that many traders are betting against the uptrend.
This suggests that futures traders are “potentially viewing the recent move as overextended,” Glassnode said in its latest Week Onchain report, adding:
“This divergence between rising open interest and negative funding sets the stage for a possible short squeeze scenario if upward momentum continues.”
A short squeeze occurs when prices rise sharply, forcing traders with short positions to buy back contracts to cover losses. Often triggered by unexpected market events or supply constraints, this buying pressure further drives prices up, trapping short sellers.
Commenting on this, analysts at Jlabs Digital said that “a rally with negative funding and rising OI is rare and bullish.”
“Until that flips, the momentum has room to run despite some caution signals we see elsewhere.”
Bitcoin must break $95K to end consolidation
According to one popular crypto analyst, Bitcoin may continue consolidating in its current range for a bit longer, particularly if the resistance at $95,000 is not broken.
“Bitcoin consolidating under resistance,” said market analyst AlphaBTC in an April 25 post on X.
He referred to the resistance at $95,000, which capped Bitcoin’s latest rally. As Cointelegraph reported, $95,000 remains the next significant resistance.
Until it is reclaimed, AlphaBTC says that the price is likely to continue consolidating within the $93,000-$95,000 range before moving higher.
“The best case is $BTC consolidating and building a base before pushing higher to take liquidity above 100k.”
Analyst Jelle shared similar sentiments, saying Bitcoin’s current consolidation cycle could continue until the price breaks above $94,000.
“Bitcoin is slowly munching its way through the monster resistance zone,” Jelle said in an April 24 post on X, highlighting the weekly resistance around $95,000.
“Impressive strength. A break above $94K and this sends a lot higher.”
The breakout could come in the next few days as April ends. QCP Capital said, “Call options at $95K strikes for end-April and end-May expiries have dominated flow, pointing to a tactical appetite for further upside.”
In an April 25 Telegram note to investors, the investment firm said:
“With macro risks temporarily subdued and trade tensions cooling, BTC is likely to consolidate in a narrow $90K–$94.5K range while awaiting a catalyst for a decisive push toward the elusive $100K mark.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
