Bitcoin (BTC) appears poised for another significant rally, with recent market signals hinting at an imminent price surge. Analysts suggest that a large cluster of short liquidations near $111,320 and a breakout from a bullish technical pattern could push Bitcoin into price discovery territory.
Funding Rates Flip Negative – A Historical Rally Signal
Bitcoin’s perpetual futures funding rate briefly turned negative in late June, a development that has historically preceded major upward price movements. When funding rates dip below zero, it means that short sellers are paying fees to long traders, indicating prevailing bearish sentiment.
Interestingly, such a sentiment shift during an ongoing price uptrend often sets the stage for a short squeeze. The market has seen similar patterns before. In September 2024 and July 2023, Bitcoin experienced negative funding rate flips followed by price surges of 80% and 150%, respectively.
This past month, BTC’s spot price climbed from under $100,000 to over $108,000 during the period when funding rates turned negative, echoing these earlier rallies.
Short Squeeze Potential as Liquidation Cluster Builds
Market data suggests that a substantial number of short positions could be vulnerable if Bitcoin’s price rises just slightly higher. The $111,320 price level is currently the most concentrated zone of potential short liquidations over the past three months. According to data from CoinGlass, around $520.31 million in leveraged positions are at risk at this threshold.
Binance BTC/USDT liquidation heatmap (3 months). Source: CoinGlass
If Bitcoin taps this liquidity, it could trigger a cascade of short liquidations. This phenomenon, known as a short squeeze, forces traders holding short positions to buy back into the market to cover their losses—driving the price even higher in the process.
Bull Flag Breakout Points to $117,500 Target
From a technical perspective, Bitcoin has broken out of a bull flag pattern on the daily chart—a bullish continuation setup that typically appears after a strong upward movement, followed by consolidation.
The breakout above the flag’s upper trendline suggests the beginning of a new upward leg. Measuring from the previous flagpole, the projected target of this pattern is near $117,500. This projection aligns closely with a recent forecast by Markus Thielen, head of research at 10x Research, who predicts BTC could reach $116,000 by the end of July.
Funding Rates Recover as Market Momentum Builds
Following the brief dip into negative territory, funding rates have recovered and turned positive once again. This shift suggests that the bearish reset may have run its course and the market could now be entering a new bullish phase.
BTC/USD daily price chart. Source: TradingView
The return to positive funding, combined with price consolidation above key resistance zones and technical breakout patterns, presents a strong case for upward continuation in the weeks ahead.
Bitcoin Price Discovery Could Accelerate Above $111K
At the time of writing, Bitcoin is trading around $110,280. With the next major resistance level and liquidation cluster sitting just above at $111,320, analysts believe that surpassing this price could open the floodgates for a sharp move higher.
Should a short squeeze occur, and technical targets hold, Bitcoin could quickly advance toward the $117,000 mark, entering a new price discovery phase and potentially setting the tone for further gains into Q3 2025.
Investors and traders will be closely watching for volatility around the $111,000 level in the coming days, as market structure, sentiment, and liquidity all appear aligned for a high-impact move.
