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

Bitcoin (BTC) was rising on Tuesday as the crypto market continued its rebound from last week’s fear-inducing plunge.
The largest crypto’s price was nearing $58,000 late in the U.S. trading session, up 1.7% in the past 24 hours and higher by nearly 10% from last Friday’s low. Ether (ETH) and solana (SOL) each advanced 1.5% over the past day.
Toncoin (TON), Artificial Superintelligence Alliance (FET) and Internet Computer (ICP) were the biggest gainers among altcoin majors, advancing 5%-8%. The broad-market benchmark CoinDesk 20 Index climbed 1.3% to 1,835, with 16 out of its 20 constituents advancing during the day.
Chances are low that crypto gets a mention during tonight’s U.S. presidential debate between Donald Trump and Kamala Harris, but the striking contrast between the two parties’ approach on digital assets, and what their leadership would mean for prices, nevertheless lends importance to the event.
Uncertainty around the election will likely weigh on crypto prices until November, said Aurelie Barthere, principal research analyst at Nansen, but today’s debate “could bring a small breather [as] Harris’ lead in the polls might erode somewhat as the tailwinds of the Democratic National Convention fade.”
While investors are still fearful of further downside, one reliable metric foreshadows a significant rally in the coming weeks and months, a Tuesday market report by K33 Research said.
The 30-day average funding rates for perpetual swaps slid to negative levels, which has only happened six times since 2018, according to the report.
“In the past, monthly funding rates hitting negative levels have coincided with a market bottom,” K33 analysts Vetle Lunde and David Zimmerman wrote.
Based on the previous occasions when the metric flipped negative, the average return in the following 90-day period was 79% with the median 90-day return being 55%, the report said.
Open interest for derivatives, meanwhile, gradually climbed to the highest level since late July as shorts piled in. This, combined with persistent negative funding rates, leaves the market for potential short squeezes, according to the report.
“Similar funding rate environments offer a very compelling case for aggressive exposure in BTC in the months ahead,” the authors said.
Edited by Stephen Alpher.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.
Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.