Why are BTC bulls so confident? What do on-chain bubble signals and funding rates reveal?

Bitcoin price trends are not arbitrary but are determined by the game between spot and perpetual market participants. Currently, these two camps show a clear divergence, but what’s more worth noting is that the bulls are quietly gaining the upper hand.

The Truth Revealed by Order Bubble Size

On-chain data analysis shows that the order bubble size in the Bitcoin spot market is forming a typical upward signal. This indicator reflects the true intentions of market participants by observing the scale and direction of trading activity at different times—visually represented by the size and color of bubbles on the chart.

Historical experience tells us that when green dots appear after a decline, followed by red dots in crypto bubbles, Bitcoin often begins an upward trend. In the past three cycles, this pattern has accurately predicted subsequent profit cycles and significant gains.

Source: CryptoQuant

However, the buy-sell ratio data suggests another possibility. Although overall spot traders remain bullish, selling pressure is gradually accumulating, indicating that market consensus may be diverging.

Different Paces in the Two Markets

Spot Market Accumulation Signal

In the past two days, spot investors have accumulated about $113 million worth of Bitcoin, reflecting confidence from institutions or large holders about the future. The total spot purchase volume in December has already exceeded $4.11 billion, indicating a stable bullish sentiment throughout the month.

Market sentiment data shows that the current bullish proportion is 50.96%, while bearish is 49.04%—almost a perfectly balanced situation, but a slight bullish advantage is gradually widening.

Perpetual Market Increasing Positions

The perpetual market shows a stronger bullish determination. The active buy-sell ratio of trading volume remains above 1. Recent data indicates that the total trading volume of perpetual contracts reached $53.23 billion, a 151% increase week-over-week, suggesting leveraged longs are continuously adding positions.

Why Are Shorts Falling Into Passivity?

Recent daily perpetual liquidation data reveals a harsh reality—shorting is no longer a rational choice.

Traders opening new short positions suffered losses of $40.56 million, while longs only lost $2.47 million, with a loss ratio of 16.4:1. This means shorts not only made wrong directional bets but also paid a risk management price 16 times higher.

Funding rate data further confirms the dominance of longs. The current rate is approximately 0.0077% positive, indicating that long positions dominate the market, and longs need to pay fees to maintain this advantage. Historically, such positive funding rate environments are constructive for Bitcoin’s long-term upward movement.

Source: CoinGlass

Key Points to Watch

• Order bubble size is demonstrating three similar historical upward precursor signals
• Spot and perpetual markets are working together, both pointing to a bullish advantage
• High loss ratio for shorts and positive funding rates double confirm: bulls have seized the pricing power

How far this rally can go depends critically on whether bulls can maintain this advantage and whether the bullish momentum in the spot market can further expand.