Analysis: Spot demand is fueling Bitcoin's rise

Bitcoin's rally this year is being driven by spot demand, which is a healthier market indicator than futures-led growth because it reflects genuine rather than speculative interest, according to an analysis by CoinDesk. The media outlet reported, citing data from Checkonchain, that demand shifted from futures to spot during the recent price increase from $90,000 to $97,000. This trend is further supported by data from CoinGlass showing that Bitcoin futures open interest has remained largely unchanged. However, the analysis also identified the negative perpetual futures funding rate as a key variable. If spot prices continue to rise while the funding rate remains negative, the risk of a short squeeze could increase. A short squeeze occurs when rising prices force the cascading liquidation of short positions, which in turn adds to the upward price momentum.