Bitcoin Drops Below $80k as Funding Rate Stays Negative

Bitcoin (BTC) traded at $79,614 on Friday, down 1.6% over 24 hours but still up 3.3% for the week, after pulling back from a Wednesday high of $81,500, which was the highest price since late January.

Other major cryptocurrencies also experienced a pullback, with Ether (ETH) dropping 2% to $2,278, Dogecoin (DOGE) sliding 3.8% to $0.1063, XRP falling 1.7% to $1.38, and BNB shedding 0.7% to $638.

Solana and TRON, however, remained in green territory at $88.14 and $0.3474, respectively. Dogecoin was the only major coin in the red on the seven-day chart.

The pullback in the crypto market came amid rising geopolitical tensions. U.S. forces fired on Iranian targets after attacks on American naval destroyers transiting the Strait of Hormuz, prompting an escalation in the region.

While President Donald Trump downplayed the strike as a "love tap," Brent crude oil prices rose by 1.2% to around $101 a barrel, although oil is still down more than 6% on the week due to broader U.S.-Iran de-escalation efforts.

Funding Rates and Short Squeeze Potential

Bitcoin futures funding rates have remained negative for 67 consecutive days, the longest such streak in a decade, according to K33 Research.

Negative funding means that short sellers are paying long traders to keep their positions open, creating the ideal setup for a short squeeze.

If Bitcoin breaks through key resistance levels, short positions could be forced to close, potentially driving the price even higher.

FxPro’s chief market analyst Alex Kuptsikevich noted that Bitcoin’s recent pause does not signal buyer exhaustion. After reaching $82,800 on Wednesday, Bitcoin pulled back to $81,300.

Kuptsikevich pointed out that the daily Relative Strength Index (RSI) had entered overbought territory above 70, a level that has preceded sharp selloffs in the past, including in August, October, and January.

However, he believes that market participants are taking a breather before making the next move.

Despite Bitcoin's bullish momentum, the options market remains cautious. QCP Capital highlighted that monthly implied volatility remains around 41%, with continued demand for put options, suggesting traders are hedging their downside while buying Bitcoin. This cautious sentiment reflects the broader uncertainty in the market.

Medium-Term Outlook

Research firm XWIN Japan set a medium-term target for Bitcoin at $93,000, driven by the potential closure of the CME futures gap.

However, they warned that the move could be volatile and may involve a leg lower before reaching that target.

For now, Bitcoin’s price action is shaped by competing pressures: the negative funding rates that make a short squeeze likely if Bitcoin breaks $83,200, and the geopolitical developments and overbought RSI that could lead to a retest of lower price levels.