Bitcoin Soars to $108K – Why Are Retail Traders Betting Against It?

Bitcoin just smashed through $108,000—another all-time high in its relentless bull run. Yet retail traders are piling into short positions like it's 2018. Are they about to get rekt?

The contrarian play raises eyebrows. Institutions keep stacking sats while Main Street tries to catch the falling knife. Remember: markets can stay irrational longer than you can stay solvent.

Here's what the charts won't tell you: every short squeeze fuels the next leg up. When liquidations hit, they'll be buying back in at $120K—the ultimate 'buy high, sell low' strategy Wall Street loves to see.

Retail selling despite price rally—Why?

Over the last 24 hours, there has been a sharp increase in short positions opened by retail investors.

The Retail Long/Short Ratio, which indicates whether retail favors buying or selling, fell sharply, confirming rising short activity.

Source: Alphractal

In fact, this marks one of the steepest increases in selling volume observed recently. A glance at the heatmap showed DEEP red around BTCUSDT, revealing sell pressure intensifying at a fast clip.

That’s not all, the Funding Rate also reflected this bearish sentiment.

Alphractal’s tweet emphasized,

“Retail traders are increasingly going short… and the aggregated Funding Rate has turned negative once again.”

Source: Alphractal

Sentiment crashes as BTC holds firm

The shift wasn’t limited to one metric.

Trader sentiment also declined sharply. The Leveraged Traders’ Sentiment ratio dropped close to 1, hinting that speculators expected downside, even as BTC continued holding above $107,000.

Source: Alphractal

Interestingly, this decline began around the 22nd of June, when BTC touched $102,400. Since then, sentiment metrics have decoupled from price.

This divergence sets the stage for potential short liquidations.

Institutional investors back the Bitcoin rally

While retail participants are selling, institutional investors continue to accumulate the asset, as inflows surge.

In the past 24 hours, institutional investors—mainly via spot Bitcoin ETFs—have bought $547.70 million worth of Bitcoin, per CoinGlass.

Source: CoinGlass

This buying trend has persisted through the week, with more than $1.48 billion spent on bitcoin purchases.

Such a large inflow suggests capital rotation from traditional markets into crypto, likely in anticipation of a major price rally.

Additionally, the Fund Market Premium, used to assess sentiment in Bitcoin investment products like Grayscale, also entered positive territory.

It recently crossed into positive territory, with a reading of 0.17. This indicates that investment funds are purchasing more BTC than before.

Source: CryptoQuant

Historically, an increase in Fund Market Premiums has aligned with Bitcoin price rallies, hinting at a possible upward move ahead.

If institutional buying persists and BTC maintains its current levels, retail short-sellers could face significant losses.

Alphractal noted,

“Bears were at risk of being liquidated at any moment.”

Given the scale of leveraged shorts, a sudden upside burst could trigger a cascade of liquidations.