Market Funding Rates Suggest Short Position Reemergence as Bitcoin Hovers Near $97K

Funding rates across major centralized and decentralized exchanges turned bearish on Jan. 9 as Bitcoin fell to the $90,000 level, according to Coinglass data cited by BlockBeats. The shift impacted both Bitcoin and altcoins, with rates below 0.005% signaling bearish sentiment, compared to above 0.01% for bullish conditions.

Bitcoin's price surged to over $97,000 on Jan. 14, pushing crypto liquidations near $800 million. The move triggered significant short liquidations, with nearly $700 million in positions closed in the past 24 hours. Ether also saw similar pressures.

Institutional demand has shown a strong correlation with Bitcoin's price movement. Bitwise reported that Bitcoin's rise above $97,000 followed a $1.25 billion BTC purchase by Strategy and strong inflows into U.S. spot BTC ETFs. The rise has also led to a decrease in the number of BTC holders and a drop in exchange-held supply.

Why Did This Happen?

Bitcoin's price movement coincided with a significant shift in funding rates and a drop in the number of BTC holders. Santiment data showed a decrease of 47,244 holders over the past two months, a trend that has historically preceded price gains. At the same time, the supply of Bitcoin on exchanges hit a seven-month low of 1.18 million BTC.

Elon Musk's recent changes to Tesla's Full Self-Driving (FSD) also contributed to market sentiment. On Wednesday, Musk announced that Tesla would stop offering FSD as a one-time purchase and switch to a subscription model. He stated, "Tesla will stop selling FSD after Feb 14. FSD will only be available as a monthly subscription thereafter".

How Did Markets React?

The market reacted to Musk's FSD announcement with mixed sentiment. Tesla's quarterly earnings showed that only 12% of the current fleet subscribed to FSD, and revenue was lower than the same period the previous year. Reaching 10 million FSD subscriptions is a key milestone for Musk to unlock his $1 trillion pay package.

Musk also criticized the recent Apple-Google AI partnership, calling it an "unreasonable concentration of power." In a post on X, he questioned the partnership's implications for market competition, particularly in the AI space. This partnership could impact xAI and its Grok chatbot, potentially excluding it from the iPhone's AI ecosystem.

What Are Analysts Watching Next?

Analysts are closely watching Bitcoin's institutional demand and ETF inflows. Bitcoin ETFs added $753.7 million in inflows as BTC reclaimed the $95,000 price level, according to Decrypt. These inflows are seen as a sign of growing institutional confidence in Bitcoin.

Coinbase is also drawing attention as it positions itself to lead in the growing stablecoin market. The company has the potential to benefit from a market expected to grow from $300 billion to $3–$4 trillion. Coinbase's recent financials showed a strong balance sheet with $11.9 billion in USD resources and $2.6 billion in long-term crypto assets according to Seeking Alpha.

Bullish Inc (BLSH) reported strong Q3 2025 revenue of $76.5M (+72% YoY) and adjusted EBITDA of $28.6M (+271% YoY). The company successfully launched its options trading platform with $1B in volume and secured regulatory approvals in key markets including Hong Kong and New York according to Investing.com.

Overall, the market remains cautious as Bitcoin ETF inflows surge and funding rates fluctuate. Analysts are watching for signs of institutional buying, regulatory changes, and major corporate announcements to gauge the next move in the crypto market.