Bitcoin Short-Squeeze to $90K: A Possibility as Funding Rates Turn Negative

Bitcoin's recent recovery from a significant correction is starting to show signs of stability. The price is moving back toward the range of $87,000 to $90,000 after dropping from $106,000 to $80,600 in just ten days. This rebound has reignited speculation about whether Bitcoin has reached a local bottom, despite a critical group of large holders (whales) continuing to sell off their supply.

Key Takeaways:

Selling Trends: Bitcoin whales and retail investors are net sellers, while mid-sized holders are increasing their positions.
Accumulator-Address Demand: Demand from accumulator addresses has surged to a record 365,000 BTC, indicating a return of long-term market confidence.
Funding Rates: Negative funding rates point towards trader capitulation, which may lead to a short squeeze.

Bitcoin short-squeeze to $90K possible as funding rates turn negative

Distribution and Accumulation Trends in Bitcoin

On-chain analysis reveals a market landscape characterized by varied behavioral trends across different holder groups. Large wallets, those holding more than 10,000 BTC, along with institutional wallets holding between 1,000 and 10,000 BTC, have consistently sold off during the downturn, contributing to the market's structural fragility. Moreover, retail wallets (with under 10 BTC) have also been net sellers over the last two months, providing limited support during this decline.

Bitcoin accumulation vs distribution by all cohorts. Source: CryptoQuant

In contrast, mid-sized holders (those with 10–100 BTC and 100–1,000 BTC) have been accumulating Bitcoin throughout this correction, effectively absorbing some of the selling pressure. Interest in Bitcoin accumulator addresses has reached an all-time high of 365,000 BTC as of November 23, up from 254,000 BTC on November 1. This significant rise indicates a renewed confidence among long-term investors. The interaction among these different groups could contribute to stabilizing Bitcoin following its initial decline, setting the stage for a potential rebound towards the $90,000 mark.

Bitcoin demand from accumulator addresses. Source: CryptoQuant

Negative Funding Rates Suggest a Short Squeeze May Be Ahead

The futures market has been pivotal in the recent Bitcoin downturn. A wave of forced liquidations, combined with margin calls, pushed the price sharply down into the $80,000 range. Current futures data shows signs of exhaustion among those holding leveraged long positions.

Aggregated Bitcoin funding rate. Source: Coinalyze

Reports from CryptoQuant suggest that traders who previously attempted to long during the correction are now “squeezed out,” as daily funding rates have dramatically cooled and briefly turned negative. With Binance's neutral funding level sitting at about 0.01%, any dip below this threshold indicates short dominance—often a sign traders capitulate late in a downward trend.

Crypto analyst Darkfost has cautioned that if short positions continue to build while Bitcoin moves upward, the market may enter a classic “disbelief phase.” This scenario could pave the way for a robust short squeeze. Liquidation heatmaps from Hyblock Capital illustrate this possibility, with long liquidations peaking at $2.6 billion around $80,000, while short liquidations surged past $8.4 billion near the $98,000 mark. As shown in the illustrations, concentrated liquidity bands at $94,000, $98,000, and $110,000 might serve as price magnets for Bitcoin.

Liquidation heatmaps. Source: Hyblock Capital

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