Analyst: Bitcoin Funding Rate Drops to New Low Since 2023, Potentially Triggering a Short Squeeze, BTC Could Surge to $125,000

BlockBeats News, April 17th, according to CoinDesk, Bitcoin is currently trading at $74,700, down 0.4% in the last 24 hours. Risk sentiment was boosted by news of a US-Iran cease-fire negotiation, with the S&P 500 hitting a new all-time high on Thursday. Former President Trump stated that the prospect of a permanent cease-fire between the US and Iran "looks very optimistic," claiming that Iran has agreed to abandon its nuclear ambitions, transfer nuclear materials, and reopen the Strait of Hormuz. However, Iran has not yet confirmed these concessions.

Meanwhile, the market is closely monitoring the structural signals behind the price movement of Bitcoin. ZeroStack CEO Daniel Reis-Faria stated: "With the funding rate so negative, hitting a new low since 2023, it indicates a heavily shorted market. If Bitcoin continues to rise in this context, a large number of short positions may face forced liquidation, further accelerating the price increase." He expects that if the short base is squeezed out, Bitcoin could reach $125,000 in the next 30 to 60 days.

On-chain analyst CryptoVizArt provided another perspective: Bitcoin's "True Market Mean" (TMM) shows that the average holding cost of active holders is currently above the current price, leaving holders in an overall unrealized loss position. Since 2016, a sustained drop below this mean has often coincided with Bitcoin's most severe downtrends, including the bear market from 2018 to 2019 (with a maximum drawdown of 57% lasting 282 days) and the downturn following the Luna and FTX collapses from 2022 to 2023 (with a maximum drawdown of 56% lasting 339 days).

Analysts point out that these two assessments are not mutually exclusive—both the short squeeze triggered by the extremely negative funding rate and the structural pressure from active holders' overall unrealized losses can coexist. The former may trigger a significant rally, but it could ultimately be absorbed by the latter selling off. The future direction of the market may depend on whether the US-Iran cease-fire can be sustained after the upcoming deadline next week.