Bitcoin Shorts Pile Up as Rally Defies Skeptics—Are Traders Walking Into a Trap?
Bitcoin's relentless surge keeps defying gravity—and the bears are doubling down. Short positions hit multi-week highs as traders bet against the rally. But history suggests this could be a costly mistake.
Market Contradictions: The Ultimate Stress Test
When futures traders and spot prices diverge this dramatically, someone's about to get burned. The last time shorts crowded this thick during an uptrend? The 2024 squeeze that liquidated $1.2 billion in bearish bets.
Wall Street's Old Playbook Doesn't Work Here
Traditional traders keep applying stock market logic to crypto—and getting wrecked. Bitcoin doesn't care about your resistance levels or overbought signals. The asset that laughed at 90% drawdowns won't blink at your puny short position. (But hey, at least your prime broker gets those sweet, sweet margin fees.)
The Coming Liquidation Cascade
Every major exchange shows the same pattern: leverage stacking against momentum. All it takes is one push past $70K to trigger automated buybacks—fueling the very rally the shorts tried to stop. The market's favorite irony: bearish bets becoming bullish rocket fuel.
Bitcoin Shorts Increase on Binance Despite Price Climb
Despite the price strength seen in recent days, certain signals hint at increasing friction between bullish price action and bearish positioning from traders.
According to a recent analysis by CryptoQuant contributor BorisVest, Bitcoin’s rise is being met with a counterintuitive decline in funding rates on Binance, the largest crypto exchange by volume. This trend could play a crucial role in shaping short-term market behavior.
BorisVest noted that as bitcoin consolidates within the $100,000 to $110,000 range, funding rates on Binance have gradually declined. This suggests that a significant number of traders are taking short positions—essentially betting that Bitcoin’s rally will soon reverse.
The analyst explained that this behavior indicates skepticism about the sustainability of the recent price gains, particularly among retail and leverage-focused traders. “The declining funding rates show that users on Binance are increasingly shorting Bitcoin,” he explained.
“This dynamic often creates forced exits as short positions come under pressure, leading to liquidations or forced margin increases. These events can further propel upward price movement as positions get closed out automatically.”
Given Binance’s dominance in trading volume, BorisVest emphasized that its funding rate trend serves as a strong proxy for overall market sentiment. If current positioning continues, the market may see a short squeeze, which could accelerate Bitcoin’s momentum toward new highs.
On-Chain Metric Flags Caution as NVT Golden Cross Edges Higher
While futures market dynamics are drawing attention, on-chain data is also showing signs worth monitoring. Another CryptoQuant analyst, Burak Kesmeci, highlighted the movement of Bitcoin’s NVT Golden Cross metric, a tool used to assess market value in relation to on-chain transaction volume.
This metric has historically signaled local tops when it moves above specific thresholds. In his analysis, Kesmeci pointed out that the NVT Golden Cross successfully identified three prior short-term peaks in 2025, each followed by corrections ranging from 9% to over 20%.
The metric currently sits at 1.98, below the 2.2 threshold that has often indicated overheated market conditions, but is trending upward. “While the current level isn’t yet in the danger zone,” Kesmeci wrote, “its upward trajectory could be an early warning that price momentum is beginning to overextend.”
However, the analyst cautioned against interpreting the signal as immediately bearish. In previous cases, the NVT Golden Cross remained elevated for several days before a correction followed.
This behavior may instead point to continued strength among bulls, at least in the medium term, even if a near-term pullback remains possible.
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