16 Oct 2025
Bitcoin is currently experiencing a short-term bullish divergence and a short squeeze, propelled by negative funding rates and the liquidation of short positions. Traders are implementing risk management strategies by securing profits and placing stop-losses, maintaining long positions amidst potential continued bullish momentum.
Bitcoin is exhibiting a short-term bullish divergence, officially initiating a short squeeze as crypto funding rates turn negative while the price rises, liquidating short positions and fueling further upward movement.
The weekly Bitcoin price chart shows the super trend indicator remaining in the green, signaling a larger bull market, though a significant bearish divergence from earlier remains active and uninvalidated.
On the 3-day Bitcoin price chart, significant momentum to either direction is lacking, with the market appearing relatively neutral in its larger momentum, despite short-term bullish and bearish fluctuations.
The daily Bitcoin price chart indicates a higher low and a breakout above resistance points. A bounce occurred before hitting the support area of $106.7K to $107.6K, potentially forming a W pattern or double bottom if the price breaks above $117,000 to $118,000, which would be extremely bullish and suggest a continuation towards new all-time highs.
Bitcoin is potentially breaking above the $113,000-$112,000 resistance level. A daily candle close above $113.5K is needed to confirm this breakout, crucial for continued upward momentum.
A hidden bullish divergence is present on the daily Bitcoin price chart, characterized by higher lows in price and lower lows in the Relative Strength Index (RSI), signaling a bullish yet weaker signal compared to a regular bullish divergence.
A regular bullish divergence, which has been playing out, is observed on the 4-hour Bitcoin price chart. The 4-hour Bitcoin RSI is entering overbought territory, suggesting the market is overheated and likely to cool off within the next one or two days, but this does not necessarily signify a permanent top.
Bitcoin has cleared a previous short-term high, creating a higher high and establishing bullish price structure. A possible inverse head and shoulders pattern could form if a rejection occurs at current levels, which would also be a bullish pattern.
The Bitcoin liquidation heat map shows liquidity building below the price at around $108.1K to $108.5K, and significant liquidity towards the upside at roughly $118,000 to $119,000, which is potentially drawing the price towards that area.
Funding rates below neutral, and in some cases negative, indicate a high demand to short crypto. Short positions are paying fees to long positions, leading to liquidations that further push the price higher, creating a short squeeze that is currently playing out.
Historically, the end of September and entry into the fourth quarter (Q4), particularly October, represent the most bullish time of the year for Bitcoin and crypto, with massive gains often observed during these months.
The trading strategy involves maintaining a long Bitcoin position while actively taking partial profits and setting a stop-loss in profits. This approach aims to protect against downside risk, ensuring profitability even in a worst-case scenario, while retaining exposure to potential further price pumps.
The Bitcoin dominance chart on the 3-day timeframe is also playing out a short-term bullish divergence, suggesting that altcoins will likely slightly underperform Bitcoin on average, even if they experience bullish price action against the USD.
Ethereum is bouncing perfectly from its significant support area of $3.9K to $4.1K. A recent breakout above short-term resistance ($4060 to $4.1K) has been confirmed, with subsequent resistance levels at approximately $4.2K, $4250-$4280, and potentially up to $4.5K if these levels are overcome.
Solana is bouncing from its targeted support area of $190 to $200, holding the larger bullish price structure intact. Resistance levels to watch are $215-$216 and then $230. The 12-hour Solana RSI was extremely oversold, indicating a likely bullish relief and bounce to reset the RSI.
XRP maintains a massive bearish divergence on the weekly timeframe that remains active. On the daily chart, a short-term bounce is continuing from a crucial support area between $2.70 and $2.80. Resistance is expected around $2.93, $3, and then $3.10-$3.15, followed by $3.30-$3.35.
Chainlink is playing out a short-term bullish move, though lagging behind Bitcoin. The larger price structure remains bearish with lower highs and lower lows. A bounce from the $19 to $20 support area is occurring, with resistance expected at $22 to $22.30. A confirmed breakout and hold above $22 would be significant, likely leading to a move towards $24 to $25.
Altcoins are expected to show bullish price action but likely lag behind Bitcoin, especially if Bitcoin dominance continues its bullish relief, a scenario that is currently playing out and is expected to continue.
Bitex and Bybit are recommended crypto exchanges offering significant trading and deposit bonuses, including up to $120,000 USDT on Bitex and up to $10,000 USDT in trial funds and $8,000 USDT in withdrawable stablecoins on Bybit. These exchanges are no-KYC, allowing access from most countries, but local regulations should always be checked.
Historically, the fourth quarter, particularly October, represents the most bullish period for Bitcoin, often leading to massive gains.
| Category | Insight |
|---|---|
| Bitcoin Market Momentum | Bitcoin is experiencing a short-term bullish divergence and a short squeeze, fueled by negative funding rates and liquidation of short positions. |
| Key Price Structure | A potential W or double bottom pattern on Bitcoin's daily chart could lead to new all-time highs if a breakout above $117,000-$118,000 is confirmed. |
| Market Indicators | A hidden bullish divergence on the daily Bitcoin chart and a regular bullish divergence on the 4-hour chart signal bullish sentiment, though the 4-hour RSI is overbought, suggesting a short-term cool-off. |
| Seasonal Trends | The fourth quarter, particularly October, is historically the most bullish period for Bitcoin, often preceding massive gains across the crypto market. |
| Trading Strategy | Implementing risk management by taking partial profits and setting stop-losses in profits is crucial for securing gains while maintaining upside potential in long positions. |
| Altcoin Performance | Altcoins are expected to show bullish price action but will likely underperform Bitcoin if Bitcoin dominance continues its bullish relief, as predicted. |
| Exchange Incentives | Crypto exchanges like Bitex and Bybit offer substantial trading and deposit bonuses (e.g., up to $120K USDT, $10K USDT trial funds) for new users via specific referral links. |
