Bitcoin (BTC) rose more than 1% in 24 hours, trading above $110,000 on the second day, supported by Altcoin Rally. Defi Tokens Uni (+24%) and Aave (+13%) surged following optimistic comments from SEC Chair Paul Atkins. Despite price increases, market sentiment is cautious, with the funding rate (1.3%) that is usually seen at the bottom.
Bitcoin (BTC) revisited the $110,000 level for the second day in a row on Tuesday.
However, despite this upward movement, general attention and skepticism among traders suggests that the sustainability of this breakout is at issue.
Bitcoin has just surpassed $110,000 shortly after the US stock market close on Tuesday, earning more than 1% in the last 24 hours.
The broader cryptocurrency market, measured by the Coindesk 20 index, tracks the top 20 cryptocurrencies by market capitalization (excluding Stablecoins, Exchange Coins and Memecoins), but rose by a more significant 3.3% over the same period.
This wider assembly was primarily due to strong performance from major altcoins such as Ether (ETH), Solana (SOL), and Chain Link (Link), all of which earned profits in the 5%-7% range.
However, the most impressive performance of the day came from the Decentralized Financial (DEFI) tokens UNISWAP (UNI) and Aave (Aave).
These tokens surged at an astounding 24% and 13% respectively.
The surge was reportedly inspired by an optimistic comment made by Securities and Exchange Commission (SEC) Chairman Paul Atkins on Defi on Monday.
In contrast, traditional stock markets associated with cryptocurrencies showed a more calm image, with most crypto stocks trading flat on the day.
A notable exception was Semler Scientific (SMLR), a company that aims to emulate a micro-strategy (MST) strategy to accumulate important Bitcoin holdings.
Semler Scientific’s shares fell another 10% on Tuesday, with the stock trading below Bitcoin’s value on the balance sheet, highlighting the risks associated with such a strategy.
Defensive posture despite the near high
Despite Bitcoin’s recent profits and previous all-time highs, the overall position of the cryptocurrency market continues to reflect largely defensive and cautious sentiment among traders.
“Funding rates and other leverage proxies refer to steady and cautious sentiment in the market,” Vetle Lunde, director of research at K33 Research, noted in a report Tuesday.
“The broad risk appetite is very weak given that BTC is approaching its previous all-time high.”
This observation suggests that traders are not entirely sure of the strength of the rally and are hesitant to take on excessive risks.
Lunde also noted that Binance’s BTC Perpetual Swaps recorded a negative financing rate last week, with an average annual financing rate currently at just 1.3%.
This level is usually related to the bottom of the local market rather than the top, he explained.
“Bitcoin usually doesn’t peak in environments with negative funding rates,” Lunde wrote, adding that past cases of such defensive positioning often precede meetings than major revisions.
Similar pictures of careful engagement are drawn as they flow into the utilized Bitcoin ETF.
The ProShares 2x Bitcoin ETF (BITX) currently holds exposure equivalent to 52,435 BTC. This is well below the peak of 76,755 BTC in December 2023.
Such inflows into products remain stifled.
According to Lunde, this defensive positioning paradoxically suggests that the market is underutilized or lacking euphoria, leaving room for a “sound gathering” for BTC.
Skepticism brings a potential breakout
However, not all market watchers are convinced that current price action marks the beginning of a sustainable upward trend.
Some analysts remain skeptical about the durability of breakouts above the $110,000 level.
“We’ve seen a lot of effort into making these things more interesting,” said Kiril Kretov, senior automation expert at CoinPanel.
More likely, it is now part of the same volatility cycle that we see the rally, followed by a sudden drop caused by negative announcements or other narrative changes.
According to Kretov, the current market environment favors experienced traders who are used to navigate volatility-driven market structures.
From a technical standpoint, he has identified the next major support levels for Bitcoin at $105,000 and $100,000.
These are zones that can be tested if sales pressure reappears and the current upward momentum collapses.
The market is currently checking whether Bitcoin can consolidate its profits and build a stronger foundation for continuous rise, or whether skepticism is validated by a retreat from current levels.
