Traders Short Bitcoin as Binance Funding Rates Drop Despite Rally Toward $109K

Bitcoin (BTC) surged above $109,000 early Monday as the Trump administration clarified that new tariffs will now take effect on August 1, easing near-term market volatility concerns. However, even with bullish price momentum, a surprising shift in market sentiment is emerging—traders are increasingly betting against the rally.

Market Mismatch: Shorts Rise as BTC Consolidates

In a recent report, CryptoQuant revealed that funding rates on Binance, the world’s largest crypto exchange by trading volume, have been steadily declining, despite Bitcoin trading within the $100,000–$110,000 range.

This signals that traders are opening more short positions, suggesting a disconnect between price action and market positioning.

The drop in funding rates implies that many market participants view the ongoing rally as an opportunity to sell or short BTC rather than accumulate. However, CryptoQuant warns that this growing market mismatch could set the stage for short liquidations and margin calls, which might trigger a short squeeze and push Bitcoin even higher.

“The increasing short exposure during a price consolidation phase could act as fuel for an upside breakout, as traders betting against the trend face liquidation risk,” the report said.

Binance Trends Reflect Broader Sentiment

Because Binance dominates crypto trading volume, its funding rates often reflect the broader mood of the derivatives market. The current downtrend in rates is thus a critical signal for analysts tracking market reversals or momentum shifts.

Dormant Wallet Moves Fail to Rattle Market

Last week, two Satoshi-era Bitcoin wallets moved 20,000 BTC (valued at $2.18 billion), marking an extremely rare event that caught the attention of on-chain analysts.

Despite speculation about institutional activity or whale sell-offs, the market remained stable, with Bitcoin maintaining its footing above $108,000 following the massive transaction. Traders appeared to interpret the wallet movements as non-threatening, adding to the bullish resilience of the market.

Signs Point to Upside Breakout

As Bitcoin consolidates near its all-time highs, technical analysts are watching closely.

“Bitcoin looks to be setting up for an upside breakout,” said John Bollinger, the inventor of the Bollinger Bands indicator.

With shorts under pressure and on-chain metrics strengthening, the setup may favor a bullish continuation, especially if macro conditions—like delayed tariffs—continue to support risk-on sentiment.

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