- Bitcoin forms bullish divergence with price making lower lows while RSI records higher lows, supported by confirmed breakout signals from trading volume.
- Derivative Market Power index rebounds from −559K to −420K, showing easing short-driven pressure after strongest bearish levels since April 2021.
- Softening funding rates, narrowing taker imbalances, and short closures reduce bearish dominance, strengthening the case for bulls reclaiming the $114K level.
Bitcoin is signaling a short-term bullish divergence as market momentum begins to shift. Traders are closely watching whether bulls can reclaim $114K.
Bullish Divergence Emerges on the 4-Hour Chart
CrypFlow observed that Bitcoin’s 4-hour chart is showing a regular bullish divergence. Price recently registered a lower low, while the RSI printed a higher low. This divergence suggests that downward momentum is weakening and buying strength could be building.
Volume patterns have confirmed a breakout, adding credibility to this setup. According to CrypFlow, the critical next step is reclaiming the $114K level. A move above this zone could flip the market structure back to a bullish trend.
At the same time, a failure to reclaim would risk a rejection, which could act as a trap for optimistic traders. Analysts stress that a breakout followed by a successful retest would instead signal a possible trend reversal. For now, momentum is gradually rising.
Derivatives Pressure Begins to Ease
Axel Adler Jr pointed to the Derivative Market Power (DMP) index as another signal of shifting dynamics. The index, which had plunged to −559K, has since rebounded to −420K. This rebound follows the strongest bear pressure seen since April 2021.
The improvement indicates that short-driven pressure is starting to weaken. As the index recovers, derivative market behavior suggests traders are beginning to rebalance positions. A gradual shift in these conditions often provides relief to the spot market.
The DMP index is calculated using three elements: aggregate open interest, funding rates, and taker-order imbalances. Together, these components capture the influence of derivatives on spot prices and reflect whether market activity is dominated by longs or shorts.
Signs of Weakening Bearish Momentum
Several factors now point to easing bearish dominance in the derivatives market. Funding rates are softening, making it less expensive to hold positions. At the same time, taker order imbalances are narrowing, suggesting that aggressive sellers are losing control.
Additionally, some short positions are being closed, reducing pressure on Bitcoin’s spot price. This unwinding of shorts is consistent with the rebound in the DMP index and the divergence now visible on charts.
Although the index remains in negative territory, the recovery reflects a less aggressive stance from bears. Combined with technical divergence, these signals raise the question of whether bulls can finally reclaim the $114K level.
