A prolonged disbelief phase could trigger a significant short squeeze, especially if traders liquidate their short positions, potentially pushing Bitcoin's price higher to $113,000 or even $126,000 based on historical patterns.

Bitcoin is currently trading around $110,814, reflecting a 2.8% increase in the past 24 hours amid expectations of a potential rally driven by short squeeze dynamics.

Analysts suggest that this disbelief phase could precede a strong bullish rally, as investor skepticism persists despite some recovery.

Historical patterns from September 2024 and April 2025 show Bitcoin previously surged sharply after entering similar disbelief phases, rising from lower levels to new all-time highs.

Past instances in September 2024 and April 2025 demonstrate that Bitcoin has historically rallied significantly after entering the disbelief phase, reaching new highs from lower price levels.

Recent slowdown in on-chain activity below the 365-day average suggests that momentum might be waning, despite signs of a potential short squeeze.

Negative funding rates of around -0.004% over the past week indicate prevailing bearish sentiment, which fuels the current disbelief phase.

This disbelief phase is characterized by negative funding rates in the derivatives market, with traders maintaining a slight bearish bias, partly due to a recent $19 billion liquidation event.

The crash on October 10 caused Bitcoin to dip to $102,000, leading to liquidation of $19 billion and a shift in trader sentiment towards a short bias.

Despite recent corrections, Bitcoin remains in the 'disbelief phase,' a stage where investor skepticism persists, potentially setting the stage for a bullish rally.

Following a sharp market crash on October 10 that pushed Bitcoin down to $102,000 and resulted in a $19 billion liquidation, the cryptocurrency has shown some recovery, but traders remain cautious.

While bullish signals are emerging, caution is advised as recent on-chain activity has slowed below its 365-day average, indicating a possible loss of momentum.