Bitcoin surges to $97,000 then pulls back: What market shifts are revealed by the stagnation of funding rates?

Bitcoin’s price today is $95,693, down slightly by 0.88% over the past 24 hours. However, behind this seemingly calm data, market sentiment is far from tranquil. Global search interest in “cryptocurrency” on Google Trends is only 27 (out of 100), not far from the 12-month low of 22. This widespread wait-and-see attitude is directly reflected in core indicators of the derivatives market.

According to the latest data from Coinglass, the current 8-hour average funding rate across the entire network is only 0.0012%, which is far from the typical performance during a strong bullish phase.

Market Turning Point

When Bitcoin recently challenged the $97,000 level, the market did not exhibit the expected frenzy. Instead, a decisive pullback occurred. This was not only a price retreat but also a signal of subtle changes within the market structure. Key on-chain data begins to tell a story different from surface price fluctuations.

Based on on-chain analysis from Glassnode, after a decisive year-end adjustment, Bitcoin is entering 2026 with a clearer market structure. The profit-taking pressure that previously suppressed prices has significantly eased. By the end of December 2025, the market’s realized profit (7-day simple moving average) had sharply declined from over $1 billion daily in Q4 to about $183.8 million per day. The main pressure facing the market now comes from supply above. Large positions are concentrated in the $92,100 to $117,400 cost range, where investors who entered near the cycle high are creating natural selling pressure as prices rebound to their cost basis.

Sentiment Indicators

Funding rates are considered the most direct barometer of market sentiment in perpetual contracts markets. This indicator, settled every 8 hours, essentially reflects the fee payments between longs and shorts to balance contract prices with spot prices.

When funding rates are positive, longs pay shorts, typically interpreted as a bullish market sentiment. However, Bitcoin’s current funding rate shows a mild state inconsistent with high price levels. The 8-hour average rate of 0.0012% is well below levels commonly seen during strong bullish rallies.

Research from Gate indicates that extreme positive or negative funding rates often signal an imminent market reversal. In early 2026, Bitcoin’s annualized average funding rate is about +0.51%, indicating a somewhat bullish market but not yet showing “extreme crowdedness” that could trigger a trend reversal.

Another key indicator in the derivatives market—the open interest—also confirms market caution. After a period of intense deleveraging accompanying the price correction at the end of 2025, total open interest in futures has begun to stabilize and gradually recover. This suggests derivatives participants are rebuilding risk exposure, but at a steady pace, far from the previous cycle’s extremes.

Retail Investors Exit

Traditional retail traders, often the most active participants during market euphoria, are unusually quiet this time. This widespread wait-and-see attitude is not accidental but results from multiple factors.

Increased global macroeconomic uncertainty has heightened volatility expectations for risk assets. Traders are paying attention to issues like the independence of the US Federal Reserve and waiting for clearer economic stimulus signals. Meanwhile, the performance of other asset classes has also diverted some speculative funds. For example, silver prices surged 28% in two weeks, attracting short-term traders who typically rotate between precious metals and cryptocurrencies. The decline in retail participation is reflected in Google search volume and the microstructure of the derivatives market.

Search data shows a general cooling of retail investor interest, while low funding rates indicate that even among professional derivatives traders, there is limited willingness to establish aggressive long positions.

Institutional Entry

Contrasting sharply with retail caution, institutional investors are becoming more prominent in the market. This is evident not only in capital inflows but also in deep structural shifts.

The US spot Bitcoin ETF is the best window into institutional behavior. After net outflows at the end of 2025, fund flows into these products have turned positive, aligning with Bitcoin’s rebound from the low $80,000 range. Although the absolute inflow has not yet reached the mid-cycle peak, the directional shift is significant. It marks a transition from potential distribution to marginal accumulation by ETF participants.

Deeper changes come from strategic shifts among traditional financial giants. From late 2025 to early 2026, firms like Vanguard, Bank of America, and Charles Schwab announced or planned to open their platforms to crypto ETFs and products. Vanguard manages about $11 trillion in assets, Bank of America serves roughly 70 million clients with over $2 trillion in assets. These policy shifts from two major players suggest a potential market scale of up to $13 trillion opening to crypto assets.

Corporate treasury allocations to Bitcoin continue to provide steady marginal demand. While such purchases are often “irregular and highly event-driven,” weekly inflows sometimes reach thousands of BTC, providing crucial downside support.

Data Overview

Based on Gate market data, as of January 16, 2026, the core market overview shows Bitcoin (BTC) at a latest price of $95,693, with a 24-hour trading volume of approximately $1.13 billion, indicating overall market liquidity remains high. The current total market cap is about $1.9 trillion, accounting for 56.44% of the crypto market, maintaining its dominant position. From a price perspective, BTC has slightly retraced 0.88% in the past 24 hours, but the medium-term trend remains strong, with a 7-day increase of 4.60% and a 30-day cumulative gain of 9.10%. In terms of range, Bitcoin touched a low of $95,139 in 24 hours, with a historical high of $126,080, reflecting its long-term upward potential amid cyclical volatility.

Future Outlook

The current market structure suggests that Bitcoin may be transitioning from a cycle driven by retail speculation to a strategic asset allocation driven by institutions. If this shift continues, it could have profound implications for Bitcoin’s price behavior.

From a technical analysis perspective, the short-term cost basis of holders (around $99,100) is seen as a key rebound threshold. Whether the market can sustain and hold above this level will be an important indicator of whether the recent rebound can evolve into a sustained uptrend. Meanwhile, the short-term holder MVRV (the ratio of spot price to recent cost basis) has rebounded from a low of 0.79 to around 0.95. This indicates that the average unrealized loss among recent investors is about 5%. Whether this indicator can break above and stabilize above 1 will be a key signal for a shift toward full market optimism.

Changes in the options market are also noteworthy. The massive options expirations at the end of 2025 cleared over 45% of open interest, removing structural hedging constraints and allowing the market to better reflect traders’ true risk appetite.

Entering 2026, options activity shows signs of shifting from defensive hedging to bullish participation. Market makers’ gamma positions in the $95,000 to $104,000 range have turned negative, meaning that as prices rise, market makers need to buy spot to hedge, potentially mechanically reinforcing the upward trend.

As Bitcoin oscillates near $95,000, institutional holdings continue to grow, and traditional financial platforms managing trillions of dollars are gradually opening crypto channels. Open interest in derivatives is rebuilding but far from euphoric levels. Meanwhile, retail traders are on the sidelines, and global search interest remains low. The participant structure of the Bitcoin market is undergoing a silent reshuffle, with every data point recording a profound shift from fringe speculation to mainstream allocation.