Bitcoin's Potential Short-Squeeze to $90K: A Case for Strategic Long Entry Amid Negative Funding Rates

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Bitcoin's market structure in November 2025 reveals a compelling narrative of short-liquidity imbalances and negative perpetual funding rates, creating a fertile ground for a potential short-squeeze rally. As the cryptocurrency trades near the $90K psychological level, a confluence of technical, on-chain, and institutional dynamics suggests that a strategic long entry could capitalize on near-term volatility.

Negative Funding Rates Signal Long Bias

Bitcoin's perpetual funding rates turned negative in November 2025, a critical shift that subsidizes long positions and incentivizes bullish positioning. This trend aligns with strategic accumulation by institutional players like Metaplanet, which secured a $130 million Bitcoin-backed loan to expand its treasury holdings. Such actions reflect confidence in Bitcoin's long-term value despite its current price being below the average cost of existing holdings. Negative funding rates indicate that shorts are paying longs to hold leveraged exposure, a structural advantage for buyers in a market where Open Interest in Bitcoin Perpetual Futures has dropped from $94 billion to $68 billion, signaling weakened bearish momentum.

Positioning Imbalances at $100K Create Short-Squeeze Catalysts

The $100K level has emerged as a focal point of liquidity imbalances. Derivatives positioning shows a $2 billion notional open interest in the $100K call, while significant put options at $85K and $80K highlight persistent downside concerns. This asymmetry suggests that a sustained rebound above $100K could trigger a short-squeeze as leveraged short positions face margin calls.

Technical indicators reinforce this setup. Bitcoin remains within a falling wedge pattern, with short-term and medium-term moving averages trending downward. However, the price has stabilized near the 85.3K–86K demand zone and the EMA 200 level, critical thresholds for a potential breakout. Institutional activity, including a major buyer, further underscores the likelihood of a short-term rebound if the 200-day moving average is retested.

Declining Seller Momentum and Short-Liquidity Dynamics

Recent volatility below the $90K level has exposed fragile short positioning. A sharp drop below $90K in late November triggered a short squeeze, with Coinglass data showing $366 million in long liquidations versus just $26 million in short liquidations. This imbalance reflects over-leveraged bulls capitulating, while shorts remain under pressure to cover positions. The Chaikin Money Flow (CMF) indicator at -0.15 confirms bearish sentiment, but the absence of a bullish divergence suggests a potential reversal is imminent.

Historical patterns also support this thesis. The Crypto Fear & Greed Index reaching "Extreme Fear" levels has historically preceded rebounds, with Bitcoin delivering strong returns after similar conditions. If the current $90K support holds, it could attract fresh demand from weak hands and institutional buyers, particularly if the price stabilizes above the STH cost basis and 200-day SMA.

Strategic Long Entry: A Calculated Bet

The interplay of negative funding rates, concentrated short positioning at $100K, and declining seller momentum creates a high-probability scenario for a short-term relief rally. A strategic long entry near $90K–$92K offers exposure to a potential rebound toward $100K or even $106,500, provided institutional buyers re-enter the market. This approach leverages the structural advantages of subsidized longs and the fragility of overleveraged short positions, positioning investors to benefit from a market correction driven by liquidity imbalances.

In conclusion, Bitcoin's current market structure presents a compelling case for near-term long exposure. The combination of negative funding rates, short-liquidity imbalances, and historical volatility patterns suggests that a short-squeeze rally is not only plausible but increasingly likely. For investors with a medium-term horizon, the $90K level represents a strategic entry point to capitalize on the next phase of Bitcoin's price action.