Bitcoin surprised the markets in recent weeks by breaking away from its typical cycle and surging to $79,000. In contrast to previous months, where Bitcoin often lost value after STRC dividend payouts, this time the digital asset moved in a new direction and recorded gains exceeding 4% in a short span. The main drivers included the unwinding of short positions in derivatives markets and robust spot purchases on US exchanges, which accelerated the rally.
Short positions squeezed, rally accelerates
Funding rates in futures trading have remained negative for an extended period, indicating that those with bearish positions on Bitcoin have had to pay ongoing costs to maintain their trades. As Bitcoin’s price moved higher, many short traders were forced to close their positions at a loss, fueling upward momentum.
Furthermore, spot prices for Bitcoin on US-based crypto exchanges have traded at a premium relative to global platforms, signaling persistent institutional demand. The continuation of this trend even after the dividend season illustrates that spot investments have not slowed down.
This picture suggests that the market is entering an early phase of a short squeeze. With negative funding rates and stable spot buying combined, many analysts predict the upward trend could continue in the coming days.
Strategy, a prominent firm investing in Bitcoin, found itself at the center of this surge. Its STRC stock, which is known for regular dividend payouts and trades near $100, is a key vehicle for crypto asset accumulation. Recently, it was disclosed that the company acquired 34,164 Bitcoin. Chairman Michael Saylor has proposed increasing STRC dividend payments to twice a year, aiming to bring greater price stability to shareholders.
Market sentiment shows signs of recovery
The fear and greed index, used as a barometer of overall market sentiment, has exhibited signs of recovery since last week. Having recently hit an “extreme fear” level at 23, the index has now climbed to 32, nearly tripling within days. However, it still remains below the neutral threshold of 40.
Technically, short-term investors are still in the red, with the current price lingering below the 200-day moving average. The ongoing negative funding in derivatives trading recalls the mid-2022 landscape. Despite these negative indicators, the slight rebound in investor sentiment stands out amidst the volatility.
Unexpected support for Bitcoin from the US
Another key driver behind Bitcoin’s rally was supportive political sentiment emerging from the United States. Recently, during a session of the US House Armed Services Committee, Admiral Samuel Paparo, commander of US Indo-Pacific Command, described Bitcoin as not only a financial asset but also an essential tool in modern computer science. He highlighted the potential of proof-of-work systems for cybersecurity, noting that Bitcoin may have strategic roles beyond value transfer.
Admiral Paparo’s remarks echoed those of US Space Force officer Jason Lowery in 2023, who also emphasized proof-of-work as a fundamental cybersecurity component. In recent months, new bills aiming to promote domestic production of mining equipment and to strengthen the country’s Bitcoin reserve strategy have been introduced in Congress. The US currently holds the world’s largest state-owned Bitcoin reserve and dominates global mining capacity. Despite this, supply chain concerns linger due to the ongoing dependence on overseas mining devices.
The market stands at a critical juncture for short-term direction. Analysts suggest that if Bitcoin closes the week above $79,200, the upward momentum could intensify. However, absent this confirmation, prices are expected to remain sideways under current conditions.
