Bitcoin’s price is approaching a critical technical zone just below $98,000, as funding rates across major exchanges flip positive. While the recent rally has fueled bullish sentiment, growing leverage in the derivatives market is raising caution flags for traders closely monitoring the sustainability of this move.
Bitcoin Tests Major Resistance
After a powerful short squeeze pushed Bitcoin (BTC) higher, the asset is now encountering multiple layers of resistance, including:
- The descending trendline from previous highs
- The 0.618 Fibonacci retracement level
- The point of control (POC) from a prior trading range
BTC is currently trading between $96,250 and $97,800, consolidating below this critical confluence zone. Breaking above it with strong volume would signal a bullish continuation, potentially toward the psychological $100,000 level. However, failure here could trigger a cascade of long liquidations.
Funding Rates Turn Positive
One of the most telling metrics in current market dynamics is the shift in funding rates. In perpetual futures markets, funding rates are payments between traders based on the difference between the spot and futures prices. A positive funding rate means long traders are paying short traders a sign of bullish positioning.
While this suggests strong confidence in upward movement, it can also indicate the market is becoming overleveraged. If spot buying and volume don’t support this sentiment, the market may experience a sudden pullback or “long squeeze,” flushing out overexposed positions.
What to Watch Next
- Breakout scenario: If BTC breaks and holds above $98,000 with volume, the positive funding may serve as momentum for a run toward $100K and beyond.
- Pullback risk: Extended positive funding without breakout confirmation increases the risk of a sharp correction, especially if demand fails to match derivatives sentiment.
- Support level: Watch the $96,200 level. As long as BTC consolidates above it, the bullish structure remains intact.
For now, Bitcoin remains at a crossroads. While the rally has sparked optimism, the interaction between funding rates and technical resistance will likely determine the next major move. Traders are advised to tread carefully as BTC hovers near a potential inflection point.
