"If you believe the current price increase, you'll be ruined"...Bitcoin begins 'disbelief rally' before crash

▲ Bitcoin (BTC)

An analysis suggests that Bitcoin (BTC) has entered a 'disbelief rally' phase, continuing its rise despite the prevailing outlook for further decline.

According to crypto media outlet Cointelegraph on April 26 (local time), despite Bitcoin's recent rebound, bearish bets continue to dominate the overall market, showing a typical 'disbelief rally' pattern. This means a phase where prices rise while investors continuously maintain short positions, not trusting the uptrend.

This discrepancy is also confirmed by on-chain and derivatives data. Despite price increases, the market's funding rates remain negative, indicating that bearish positions are dominant, suggesting that investors consider the current rise to be a temporary bounce. Indeed, Bitcoin has continued to rise in recent weeks, but market participants' sentiment remains defensive.

This structure has been repeated in the early stages of past bear market bottoms. At that time, too, the market did not trust the rise and continuously maintained short positions, and consequently, the liquidation process of these positions acted as fuel for further gains. In other words, an paradoxical situation could arise where market pessimism actually strengthens the uptrend.

However, not all analyses are optimistic. Some analysts point out that futures premiums are rapidly shrinking in the derivatives market, which means that upward momentum is weakening. In particular, the sharp decrease in the short-term basis is interpreted as a structural bearish signal, indicating that the market is no longer assigning a premium to leveraged long positions.

Ultimately, the current Bitcoin market has entered a phase where expectations for both rise and fall are in extreme conflict. If the ongoing rise amidst investor disbelief continues, it could lead to further upside potential, but at the same time, if the market structure weakens, the possibility of increased downside volatility cannot be ruled out.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*