After the massive selloff on October 10, which briefly dragged Bitcoin (BTC) down to $102,000 before a modest rebound, the market seems to be at a turning point. Analysts now believe Bitcoin has entered its “disbelief phase” — a psychological stage in which skepticism dominates even as prices begin to recover.
This phase, according to market observers, may set the stage for a potential short squeeze that could surprise bearish traders still betting against the world’s top cryptocurrency.
In crypto market cycles, the disbelief phase typically appears when a new uptrend quietly begins following a major correction. It’s still unclear to many investors, though, who think the recovery will only last for a short time. This doubt often causes a buildup of short positions, which can make an upward move stronger when they are closed.
According to Darkfost, a contributor on CryptoQuant Quicktake, Bitcoin is displaying early signs of this disbelief phase. The analyst highlighted the slightly negative funding rates, signaling persistent bearish sentiment among traders.
Darkfost pointed out that on big exchanges, funding rates have stayed negative (-0.004%) for six of the last seven days. This shows that short positions are still the most common type of position.. After the crypto market crash on October 10, which caused a bankruptcy event worth nearly $19 billion, many traders are still being careful.
Despite this lingering negativity, analysts warn that the longer Bitcoin remains in the disbelief phase, the greater the chance of an explosive breakout. As Darkfost explained:
“If the current uptrend continues to hold, the growing pile of short positions could become fuel for the next leg higher.”
Essentially, if Bitcoin’s price begins to climb steadily, short sellers may be forced to close their positions — a process known as a short squeeze — which in turn pushes prices even higher.
Darkfost’s analysis points to key liquidity zones around $113,000 and $126,000, where many short orders are clustered. If there is a squeeze, these levels could be possible goals for the upside.
The expert pointed out two recent examples of big rallies that happened because of similar conditions:
In September 2024, Bitcoin fell to $54,000, but it quickly rose again to a new high above $100,000.
April 2025: BTC surged from $85,000 to $111,000, later extending gains toward $123,000.
If history repeats itself, current bearish positioning could once again become the trigger for Bitcoin’s next upward surge.
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Bullish investors are excited about the possibility of a short squeeze, but experts warn them to be careful.. Bitcoin network activity has recently fallen below its 365-day average, suggesting that momentum may be slowing even as prices attempt recovery.
Nonetheless, many market participants believe that the major part of the correction is over and that Bitcoin may soon resume its long-term bullish trajectory. BTC is now worth about $110,814, which is 2.8% more than it was 24 hours ago.
Even as Bitcoin shows potential for a rebound, the broader cryptocurrency market continues to experience range-bound trading with a clear downward bias. The most valuable cryptocurrency had a hard time staying above $108,000, which showed that buyers were being cautious.
Ethereum (ETH) also mirrored Bitcoin’s weakness, slipping below $3,900, while several altcoins — including Zcash (ZEC), Morpho (MORPHO), and Mantle (MNT) — faced steep declines.
Analysts say that this slow performance is due to rising trade issues between the US and China and people continuing to take profits after Bitcoin hit a new high. The current trend, they argue, reflects market fatigue rather than panic.
At last check, Bitcoin was quoted at $107,793, down 3.24% over the past 24 hours, with a daily trading volume of $87.53 billion, according to CoinMarketCap. At $2.14 trillion, the cryptocurrency’s market capitalization stayed strong, showing that it continued to be the most valuable digital asset.
Even with its strength, BTC is still trading 14% below its all-time high of $126,198, which was set on October 7. The value of the token has dropped 6.49% in the last week and 5.49% so far this month.
Riya Sehgal, a research analyst at Delta Exchange, says that Bitcoin’s failure to stay above $126,000, along with slowing ETF inflows and weakening technical indicators, points to a phase of consolidation rather than a full-on reversal.
“Volatility stays high, which shows that people are still unsure because both bulls and bears are still active.” In the short term, we expect range-bound action. However, Bitcoin’s fundamentals remain strong, and long-term investors should treat deeper corrections as opportunities,” Sehgal said.
From a technical perspective, analysts at CoinSwitch Markets Desk identified resistance between $113,000 and $115,000, and support in the $108,000–$110,000 zone. Without a clear market catalyst, they expect the market to continue trading in a tight range, with participants closely watching macroeconomic developments for clues about the next breakout.
Ethereum, the second-largest cryptocurrency by market capitalization, also showed weakness. At the time of this report, the price of ETH was $3,854, which is 4.3% less than it had been 24 hours before. A total of $48.91 billion had been moved.. The token fluctuated between $3,829 and $4,079, marking a 21% drop from its August peak of $4,953.
The selloff extended to the altcoin market, with assets such as Kaspa (KAS), Aave (AAVE), PancakeSwap (CAKE), and Avalanche (AVAX) posting losses of 7–15%. Stablecoins backed by gold, like Tether Gold (XAUt) and PAX Gold (PAXG), saw small gains of up to 4%. This shows that investors are moving their money to safer digital assets.
Coin Market Cap says that Ark of Panda (AOP), Strike Bit AI (STRIKE), Quq (QUQ), Bitcoin (BTC), and PAX Gold (PAXG) were the most-searched and trending cryptocurrencies. This proves that the market is a mix of careful optimism and risky excitement.
In conclusion, while Bitcoin’s current “disbelief phase” hints at potential for a powerful short squeeze, traders should tread carefully. There is still a lot of instability because of macro risks, slower activity, and market fatigue.
Yet, if the pattern from previous cycles holds, the skepticism dominating the market today may well be the foundation for the next major Bitcoin rally.
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