The cryptocurrency market appears to be entering a phase of investor skepticism, according to analytics firm CryptoQuant. Despite recent gains in Bitcoin (BTC), market participants remain cautious, with funding rates on Binance persistently negative.
Negative Funding Signals Caution
Funding rates, a key indicator of market sentiment in crypto derivatives, have stayed negative for six of the past seven days on Binance, which dominates global derivatives trading. Currently, the rate is around -0.004%, reflecting a predominance of short positions.
Experts attribute the cautious stance to the market sell-off on October 11, after which traders have preferred short positions, anticipating potential further declines.
Skepticism Can Precede a Bullish Surge
Interestingly, CryptoQuant analysts note that prolonged investor skepticism often precedes strong upward moves. If the ongoing bullish trend consolidates, the accumulation of short positions could act as fuel for a sharp rally. Short liquidations could trigger a short squeeze, potentially driving Bitcoin prices toward critical liquidity zones between $113,000 and $126,000.
This pattern mirrors previous recoveries in September 2024 and April 2025, when Bitcoin rebounded after sharp corrections. Current market structures suggest a similar setup may be unfolding, with cautious sentiment masking potential bullish momentum.
Declining Open Interest
In addition, CryptoQuant previously reported a $12 billion decrease in Bitcoin open interest over the past week, indicating that some traders are reducing exposure, further emphasizing the prevailing market caution.
Overall, while Bitcoin has shown gains, the market remains in a tentative phase, and analysts highlight that distrust among investors could paradoxically strengthen the next upward move.
