Bitcoin's "Disbelief Phase" Hints at Imminent Short Squeeze
After enduring a notable crash on October 10, which saw Bitcoin (BTC) briefly dip to $102,000, analysts are increasingly suggesting that the premier cryptocurrency is entering a pivotal "disbelief phase." This period, characterized by widespread skepticism despite nascent recovery, often serves as a precursor to significant bullish rallies, potentially setting the stage for a massive short squeeze.
The Disbelief Phase: Bearish Bets Fueling Future Upside
The "disbelief phase" in Bitcoin's market cycle arises when a new uptrend begins, yet a majority of investors remain unconvinced, largely due to recent market corrections. CryptoQuant contributor Darkfrost points to persistently negative funding rates in the derivatives market—hovering around -0.004% for most of the past week—as key evidence of this lingering bearish sentiment. This skepticism follows the October 10 crypto market crash, which triggered $19 billion in liquidations and encouraged traders to favor short positions, anticipating further pullbacks. Paradoxically, this accumulation of short interest could become the very fuel needed for a powerful rebound.
Historical Precedents and Price Projections
Historically, extended periods within the disbelief phase have preceded explosive upward movements. Darkfrost's analysis suggests that as these accumulated short positions are liquidated, they could trigger a rapid price surge—a "short squeeze." If this scenario unfolds, Bitcoin could swiftly rally towards major liquidity zones around $113,000 and potentially even reach as high as $126,000, where substantial short order liquidations are clustered. Past instances, such as Bitcoin's surge past $100,000 after falling to $54,000 in September 2024, and its rally from $85,000 to $123,000 in April 2025, illustrate this pattern.
Navigating the Market: Caution Amidst Potential Gains
While the signals for a looming short squeeze are compelling, investors are advised to exercise caution. Recent data indicates a slump in Bitcoin's on-chain activity below its 365-day average, raising concerns about potential loss of momentum. However, other crypto analysts maintain a bullish outlook, forecasting that Bitcoin's price correction has run its course. As of press time, BTC is trading around $110,814, marking a 2.8% increase over the past 24 hours, suggesting that the market is indeed delicately poised between skepticism and an anticipated upward trajectory.
