Bitcoin at $78K as negative funding fuels short-squeeze bets

On Tuesday, Bitcoin traded near $78,000 as funding on perpetual futures remained unusually negative, prompting traders to bet that a short squeeze could lift the price to about $85,000 while the asset tests the 21-week exponential moving average.

Data from exchanges and charting platforms showed BTC/USD moving into the high $70,000s during the weekly candle and coiling beneath a wide band of overhead resistance. Market participants pointed to persistent negative funding rates on perpetual contracts as the main factor behind short-squeeze speculation. Negative funding indicates a concentration of short positions that may need to buy back if prices rise rapidly.

Trader Michaël van de Poppe wrote that price action looks like “a period of consolidation, but clearly upwards pattern,” and projected a move to roughly $85,000 within “two to three weeks,” linking crypto momentum to gains in the Nasdaq. Another trader, Osemka, highlighted the rarity of negative funding while the chart is grinding higher, writing, “We’ve never actually gotten one when the chart was grinding up. NEVER. It only occurred during the local BOTTOMS,” and added that “something is brewing beneath.”

Market intelligence firm Decode wrote that the market is heavily short and warned of a potential squeeze, adding, “The cannon is loaded, bulls just need to light the fuse…”

Analysts identified the 21-week EMA and the estimated average buy-in price for U.S. spot Bitcoin ETF investors as immediate technical barriers above the spot price. Traders said clearing those levels would allow prices to move higher.

Futures-market structure drew further attention. Trader Daan Crypto Trades reported that Bitcoin had filled much of a weekend gap in CME Group’s Bitcoin futures book but had not closed it entirely, noting that markets were “following the headlines” and awaiting additional catalysts.

Geopolitical developments provided background volatility. Mixed signals on U.S.-Iran negotiations and a temporary closure of the Strait of Hormuz produced only muted responses in crypto prices, according to exchange data.

Market participants are watching whether sellers will defend the 21-week trend line or whether concentrated short positions will result in rapid buying that could push Bitcoin into the low $80,000s in the near term.