Bitcoin Rally Collapses at $97K as Funding Rate Stalls, Retail Traders Sit Out

The unprecedented ascent of Bitcoin (BTC) was abruptly halted this week, suffering a massive correction after failing to decisively break the critical resistance level of $97,000. Following a rapid surge that many analysts labeled as potentially parabolic, the rejection at this key psychological barrier triggered a severe cascade of long liquidations, pushing the price down by over 15% from the peak.

Market metrics suggest that the failure was primarily driven by waning institutional conviction and critically low retail participation. A significant indicator of this loss of momentum was the stalling of the perpetual swap funding rate. Typically, during aggressive bullish moves, funding rates spike sharply, reflecting high demand for leveraged long positions. However, as BTC approached $97K, the funding rate flattened out and failed to move significantly into positive territory. This indicates that professional derivatives traders lacked the conviction necessary to push the price through the resistance, signaling market exhaustion.

Furthermore, on-chain data confirms that the broader retail community remains sidelined. Unlike previous bull cycles where smaller wallet addresses provided significant volume support during consolidation phases, current participation from retail investors is minimal. This lack of organic, broad-based buying pressure meant that when institutional sellers began taking profits near the $97K mark, there was insufficient liquidity beneath the market to absorb the selling pressure, leading to the rapid collapse. The market now enters a period of crucial consolidation as traders assess whether this rejection was a necessary leverage flush or the beginning of a prolonged downtrend.

Source: Bitcoin rally collapses at $97K as funding rate stalls, retail traders sit out