Bitcoin Eyes $58K With Downtrodden Crypto Markets Exposed to Short Squeezes, Says Analyst

Bitcoin (BTC) is experiencing a rebound, nearing $58,000 as the crypto market recovers from last week’s decline. The largest cryptocurrency is up 1.7% over the past 24 hours and has risen nearly 10% since hitting a low last Friday. Other cryptocurrencies, including Ether (ETH) and Solana (SOL), have also seen gains of about 1.5%.

Amid this recovery, altcoins like Toncoin (TON), Artificial Superintelligence Alliance (FET), and Internet Computer (ICP) have made notable strides, climbing 5% to 8%. Overall, the broad-market benchmark Index increased by 1.3%, with a majority of its constituents advancing.

As the U.S. presidential debate approaches, it’s unlikely that cryptocurrency will be a central topic. However, the differing stances on digital assets between candidates Donald Trump and Kamala Harris could impact market sentiment. Analysts suggest that uncertainty surrounding the election may keep crypto prices under pressure until November, although the debate might provide a brief respite, particularly if Harris’ polling lead begins to diminish.

A key indicator from K33 Research highlights a potentially significant market shift: the 30-day average funding rates for perpetual swaps have dipped to negative levels, a situation that has historically signaled a market bottom. This has only occurred six times since 2018. K33 analysts noted that past instances of negative funding rates have been followed by substantial gains, with an average 90-day return of 79% and a median return of 55%. This trend could bode well for crypto investors looking ahead to the coming weeks and months.

Open interest in derivatives has been steadily rising, reaching its highest level since late July as more short positions accumulate. This, combined with ongoing negative funding rates, creates a fertile ground for potential short squeezes in the market.

The report emphasizes that similar funding rate conditions in the past have led to significant bullish reversals. The authors suggest that this environment presents a compelling opportunity for aggressive exposure to Bitcoin (BTC) in the upcoming months, as traders could see sharp price movements if short positions are forced to cover. Such dynamics could enhance upward momentum in the market, especially if positive sentiment continues to build.