Bitcoin Traders Short the Rally — Is a Squeeze Incoming?

Bitcoin has been trading in a narrow range just below its all-time high, displaying signals of upward momentum but unable to recapture its peak price.

The asset reached a seven-day high of $110,307, but it has subsequently cooled to $108,311, a 0.3% loss in 24 hours.

The market is cautiously optimistic, but multiple signs imply market players are divided on Bitcoin's future.

Bitcoin Shorts Rise on Binance Despite Price Rise
Despite recent price increases, some signs suggest traders are becoming more negative.

According to CryptoQuant contributor BorisVest, Binance, the biggest crypto exchange by volume, is seeing a surprising fall in financing rates as Bitcoin rises. Short-term market behavior may depend on this pattern.

Binance financing rates have dropped as Bitcoin consolidates between $100,000 and $110,000, according to BorisVest. This shows that many traders are shorting Bitcoin, wagering that its surge will end.

This activity suggests uncertainty about the durability of recent price rises, especially among retail and leverage-focused traders, the analyst said. “The declining funding rates show that Binance users are increasingly shorting Bitcoin,” he said.

This trend typically forces liquidations or margin hikes when short positions come under pressure. As positions close automatically, these occurrences might boost prices.”

BorisVest said that Binance's financing rate movement is a good indicator of market mood because to its trading volume dominance. If present posture maintains, a short squeeze might boost Bitcoin to new highs.

At 1.98, the indicator is below the 2.2 threshold that indicates overheated markets, but it is rising. “While the current level isn't yet in the danger zone,” Kesmeci noted, “its upward trajectory could be an early warning that price momentum is beginning to overextend.”

The expert warned against automatically reading the indication as pessimistic. In past occasions, the NVT Golden Cross rose for days before correcting.

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