Quick Facts
| Bitcoin’s price consolidation range | $91,700 to $94,490 |
| Bitcoin’s funding rates | -0.023% |
Bitcoin Price Consolidation: How Long Will the Stagnation Continue?
Bitcoin’s price has been consolidating within a tight range of $91,700 to $94,490 since April 22, leaving many wondering how much longer this choppy price action will continue. Despite the uncertainty, several expert opinions and indicators suggest that Bitcoin’s price is poised to break out of its consolidation phase soon.
A Rare Divergence Sets the Stage for a Short Squeeze
One of the most significant signs that consolidation will end soon is the presence of negative funding rates in Bitcoin’s futures markets. While the recent recovery in Bitcoin’s price was accompanied by a 15% rise in open interest, average funding rates declined, suggesting rising short interest. This divergence between rising open interest and negative funding rates sets the stage for a possible short squeeze scenario.
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. Glassnode, a leading on-chain analytics provider, highlighted this rare divergence between rising open interest and negative funding rates in its latest Week Onchain report, saying:
This divergence between rising open interest and negative funding rates sets the stage for a possible short squeeze scenario if upward momentum continues.
BTC Funding Rates Hint at Potential Short Squeeze
Bitcoin’s funding rates, which are used to calculate the cost of holding a long or short position, 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, setting up a potential short squeeze scenario. Analysts at Jlabs Digital commented on this, saying that “a rally with negative funding and rising OI is rare and bullish.”
Does Crypto’s Current Consolidation Cycle Have Room to Run?
Some analysts believe that Bitcoin’s price may continue consolidating in its current range for a bit longer, particularly if the resistance at $95,000 is not broken. According to AlphaBTC, market analyst, “Bitcoin consolidating under resistance”… Until that flips, the momentum has room to run despite some caution signals we see elsewhere.”
AlphaBTC referred to the resistance at $95,000, which capped Bitcoin’s latest rally. This significant resistance level remains the next hurdle for Bitcoin’s price, and 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 Importance of a Break Above $95,000
Reclaiming the $95,000 level could be a crucial catalyst for Bitcoin’s price to continue its upward momentum. Analyst Jelle said, “Bitcoin is slowly munching its way through the monster resistance zone.” A break above $94,000 and this sends a lot higher.
The Weekly Chart: Bitcoin’s current consolidation cycle could continue until the price breaks above $94,000. According to Jelle, “Impressive strength. A break above $94K and this sends a lot higher.”
Disclaimer:
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.
