Bitcoin’s Price Surges Toward Recent Highs, But Retail Traders Load Up On Shorts

After triggering fears and uncertainty with its pullback below the $100,000 mark, Bitcoin has found its footing again, rising back above $107,000 in a remarkable rebound. Despite this notable upward performance, retail investors do not seem convinced about the newfound rally in BTC.

Bearish Bets Increase Among Retail BTC Traders

Bitcoin’s price has rebounded strongly and is slowly approaching the next significant resistance at $108,000. However, this renewed upward action from the flagship asset is being met with skepticism from retail investors.

Alphractal, an advanced investment and on-chain data platform, reported that retail traders are increasingly opening short positions as BTC stages a strong rally. A surge in short positions among retail traders implies that these investors are increasingly betting against the flagship asset’s recent rally.

This surprising trend has raised uncertainty about the ongoing rally, with retail investors aiming to capitalize on a possible pullback. In the past, retail bearishness during periods of price strength has occasionally preceded further upward movements, suggesting that there may still be an opportunity for Bitcoin’s bull run to continue.

While retail traders are increasingly opening short positions, Alphractal highlighted that the aggregated Funding Rate shifted into negative territory once more. A negative funding rate suggests a shift in trader sentiment as short positions begin to mount.

The shift into negative territory is an indication of growing pressure in the derivatives market as retail investors anticipate a pullback. Such a development, which reflects pessimism, has typically preceded short squeezes, making it a critical moment in Bitcoin’s ongoing upward action. 

According to the on-chain platform, this indicates that the recent surge in Bitcoin is taking most market players by surprise, which is a clear indication that many are still skeptical of the current trend.

Drawing attention to a previous post about sentiment analysis and liquidation levels, where bears were at risk of being liquidated at any time, the platform noted that this anticipated liquidation is currently taking place. As a result, Alphractal is confident that BTC still has room for more upside movement.

BTC Whales Pushing For More Upside

Retail investors might be shorting BTC, but whale investors are aggressively going long on the asset, as reported by Alphractal. After examining the 7-day Open Interest Delta, the platform revealed that the metric has turned positive again.

A positive Open Interest Delta signals that large investors are increasing their bullish bets and are looking to capitalize on the ongoing uptrend. The Bitcoin Whale Position Sentiment also confirms this key narrative.

Historically, this crucial metric has displayed a 93% connection with changes in BTC’s price. When the metric rises, prices tend to follow. Furthermore, when it declines, it indicates that whales are opening short positions even as the price surges.

Presently, the key metric has risen while prices have also increased sharply, which means large investors are opening long positions. Alphractal claims that this action shows that large investors are shaping the market’s next big move.”

Featured image from Pixabay, chart from Tradingview.com

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