Recent insights shared by the CryptoQuant chain analysis platform highlight a notable shift in trader behavior on Binance.

A surge in short positions, a sharp decline in open contracts, and the resilience of the spot market may suggest that Bitcoin is entering an accumulation phase—which could set the stage for a trend reversal.

Binance Open Interest decreased by 37% after ATH

Binance's open interest reached an all-time high of $12 billion, reflecting aggressive buying positions. After a significant price correction for BTC, open interest fell to $7.5 billion—a decrease of 37%. According to CryptoQuant, this liquidation may have forced many over-leveraged buying orders to exit, paving the way for increased short positions.

Funding rate volatility is leaning towards a bearish trend

CryptoQuant's data also notes that Binance's funding rate peaked at around 0.04%, indicating strong buying trends at that time. However, as Bitcoin fell from the $75,000 mark, the funding rate decreased and has recently turned negative. This suggests that short sellers are currently paying to buy in—a sign that pessimistic sentiment is prevailing in the market.

Traditionally, extremely negative funding rates often occur before short-selling conditions arise when prices suddenly rise, forcing short sellers to protect their positions—boosting the upward momentum.

Basic demand signals in the spot market

Despite pessimistic future data, CryptoQuant indicates a significant divergence: the spot price of Bitcoin is trading about $60 higher than the perpetual futures price on Binance. This gap implies that while the futures market is dominated by short sales, spot market participants may be accumulating.

The divergence between spot accumulation and pessimism about the future can often signal a potential bullish trend, especially in the market context before a reversal.

Bottom line: Liquidation, reset, or groundwork for a rally?

Based on CryptoQuant's data:

  • Open interest declines sharply

  • Funding rate is negative

  • Spot prices show superior strength compared to perps

This combination suggests that the market may be in a reset or accumulation phase, rather than a complete collapse. Traders should closely monitor volatility signals and potential reversals, especially if selling pressure continues to increase.