As the situation between Israel and Iran has somewhat stabilized, analysts are refocusing on Bitcoin’s next significant change. Earlier this week, Bitcoin’s value fell below the $100,000 threshold after Iran’s missile attacks on U.S. military sites in Qatar. Although the price recovered to $108,000 by Wednesday, recent derivatives analysis indicates a potential decline in investor trust. The pressing question now is whether we are on the brink of further declines.

On Wednesday, Bitcoin’s perpetual futures funding rate fell to its lowest point in seven weeks, which is particularly unusual given the price increases. Typically, traders holding long positions incur fees to sustain leverage; thus, negative rates indicate a rise in short positions. This shift may relate to broader geopolitical uncertainties, as the ongoing trade conflict with the U.S. is approaching critical milestones.

“Recent data indicates a rise of 11% in the United States trade deficit for May.” — FactPost (@factpostnews)

Additionally, recent economic indicators have shown a contraction in U.S. GDP by 0.5% year-over-year in Q1, largely attributed to a growing trade deficit. Despite this, small-cap U.S. stocks have experienced a rebound, complicating the outlook for Bitcoin enthusiasts.

Concerns regarding excessive valuations driven by AI development are also influencing market sentiment. Analysts at Gartner have cautioned that many AI projects are still in the experimental phase, and their misuse could lead to adverse market reactions. Price corrections above $105,000 now appear to be more probable.

As developments unfold, the cryptocurrency community remains vigilant for signs that could suggest a sharp correction or a sustained rally. Historically, Bitcoin’s funding dynamics have indicated one of two outcomes: a rapid pullback or a continuation rally, depending on market support dynamics. Monitor these closely as the narrative evolves.