Market Participants Increase Short Bets with Bitcoin Closing in on All-Time Peaks

Bitcoin Nears Record Highs as Traders Increase Short Bets, Raising Squeeze Risks

Bitcoin (BTC) has surged past $110,000 and is inching closer to surpassing its all-time high above $112,000. Yet, despite this upward momentum, traders appear increasingly bearish.

Figures from Coinalyze show that as BTC climbed from $106,000 to $110,000 this week, the long/short ratio fell significantly—from 1.223, indicating more traders betting long, to 0.858, revealing a shift toward short positions.

This ratio, which tracks the number of accounts holding long versus short trades, provides a window into how retail investors are positioning themselves. Notably, it has flipped negative several times during bitcoin’s recent move past $100,000, a stark contrast to the steady positive bias observed during the 2021 rally.

Meanwhile, open interest expanded sharply from $32 billion to $35 billion, signaling that substantial capital is flowing into bearish bets. However, funding rates remain positive, suggesting there’s still confidence among some traders holding long positions.

Since early May, bitcoin has mostly traded within a tight band between $100,000 and $110,000, testing both levels multiple times as support and resistance.

Technical indicators paint a mixed picture. The relative strength index (RSI) is showing bearish divergence, weakening with each push to break above $110,000.

The growing number of shorts could simply reflect short-term traders capitalizing on the current price range, selling near $110,000 resistance and switching to long positions if BTC revisits $100,000 support. A similar trend was evident on June 22, when the long/short ratio spiked to 1.68 as bitcoin briefly dipped under $100,000 before rebounding quickly.

However, there’s still room for a bullish twist: if bitcoin breaks through resistance, the build-up of short positions could trigger a short squeeze. Liquidations of those short bets might fuel aggressive buying, potentially sending prices surging even higher.