Bitcoin surge toward $110,000 has triggered a wave of bearish positioning despite its proximity to all-time highs. Traders are increasingly shorting BTC as technical indicators flash warning signs, creating potential for explosive volatility.
Short Positions Surge Near Key Resistance
• Bearish sentiment dominates: The long/short ratio flipped from 1.22 (bullish) to 0.86 (bearish) as BTC climbed from $106K to $110K .
• $3B influx into shorts: Open interest rose from $32B to $35B, signaling heavy capital deployment against further gains .
Bitcoin long/short ratio (Coinalyze)
• Technical red flags: Repeated bearish RSI divergence at $110,000 resistance suggests weakening momentum .
Range-Bound Trading Pattern Persists
Bitcoin remains trapped between $100,000 support and $110,000 resistance since May, with three tests of each level. Traders appear to be exploiting this range:
• Shorting near resistance ($110K)
• Covering near support ($100K)
This strategy was evident on June 22 when the long/short ratio spiked to 1.68 during a dip below $100K .
The Bull Case: Short Squeeze Potential
The growing short interest creates explosive upside potential. A decisive break above $112,000 could trigger:
1. Mass liquidations of bearish positions
2. Forced buying from covered shorts
3. Accelerated upward momentum
“Below current price, long liquidations are notably lighter… implying stronger upward pull if $107K breaks,” noted analyst TheKingfisher .
Market Context
• Bitcoin gained 7.4% this week, rebounding from sub-$99K to test $109K.
• 98% of BTC supply is now in profit – a historically volatile condition.
• Fed rate cut odds remain at ~67% for September, supporting risk assets.
