Traders Bet Against Bitcoin as Price Nears Record Highs, But Short Squeeze Risk Looms
Bitcoin (BTC) remains above $110,000 and is inching closer to surpassing its previous all-time high of around $112,000, yet traders are growing cautious and increasingly betting on a pullback.
Data from Coinalyze shows that as bitcoin rallied from $106,000 to $110,000 this week, the long/short ratio fell from 1.223—indicating more traders were long—to 0.858, reflecting a shift toward short positions.
This ratio measures how many traders are betting on price increases versus declines and offers a snapshot of overall market sentiment. Notably, during bitcoin’s climb beyond $100,000, the ratio has slipped negative several times, in sharp contrast to the steady bullish readings seen during the 2021 surge.
Meanwhile, open interest grew from $32 billion to $35 billion during the same period, highlighting that significant capital has flowed into short bets. However, funding rates remain positive, suggesting there’s still confidence among traders who are holding long positions.
Since early May, bitcoin has traded mostly between $100,000 and $110,000, repeatedly testing these levels as resistance and support.
Technical indicators are mixed. The relative strength index (RSI) is signaling bearish divergence, showing weakening momentum on each attempt to push past $110,000.
Many traders may simply be exploiting bitcoin’s recent range-bound behavior, choosing to short resistance near $110,000 and potentially flipping long if prices revisit the $100,000 support zone. A similar pattern emerged on June 22 when the long/short ratio surged to 1.68 as bitcoin briefly dipped below $100,000 before quickly recovering.
Still, the significant number of short positions introduces the possibility of a short squeeze. Should bitcoin break through its resistance levels, it could force shorts to cover their positions, triggering stop-losses and liquidations that might send prices soaring even higher.
