Bitcoin Traders Betting Against the Rally – Will It Backfire?

Bitcoin (BTC) is sitting just beneath its last all-time peak, demonstrating strength but struggling with hesitation to create a clean breakout. In spite of latest upward trend, numerous traders are staying cynical—and they're gambling on it.

Bitcoin Pauses Below Peak as Traders Go Short

In the last seven days, Bitcoin has reached a seven-day high of $110,307 but has since moderated to about $108,311, a modest 0.3% decline in the past 24 hours.

Although the mood in the crypto market is leaning towards cautious optimism, the new data identifies a definite split amongst investors, particularly in derivatives trading.

Binance Traders Step Up Shorts Despite Strength of BTC

As CryptoQuant contributor BorisVest highlights, Binance traders are selling short Bitcoin even as the price consolidates above the $100,000 mark.

As BorisVest points out, funding rates—a critical market sentiment indicator—are falling on Binance, indicative of an increase in bearish positions. That is, the rise in prices and decrease in funding rates indicate that most market players anticipate a reversal.

Slowing funding rates indicate Binance users are shorting more Bitcoin," commented BorisVest. "This tends to result in forced liquidations and exits, which can provide upward impetus."

Should short positions keep piling up, a short squeeze may be coming. This situation would compel the bears to close at a loss, which could propel Bitcoin to fresh all-time highs. On-Chain Measures Indicate Wary through NVT Golden Cross Aside from the derivatives market, on-chain signs are also sending mixed signals.

CryptoQuant analyst Burak Kesmeci pointed out the NVT Golden Cross, a metric that measures network value vs. transaction volume. This indicator has, in the past, accurately predicted short-term market tops.

At present, the NVT Golden Cross is at 1.98, moving in the direction of the caution point at 2.2. As much as this level is not immediately concerning, its rising trend may be an indication that BTC's rally is on the verge of a possible cooling-off.

"The rising movement of the NVT Golden Cross may be an early indication," Kesmeci explained. "But historical instances reveal the indicator can remain elevated for days before correcting kicks in."

Market Outlook: Bull Trap or Bear Trap?

As retail and leverage-based traders short bet, on-chain and exchange metrics suggest that this bearish positioning could be a bear trap.

Should the short squeeze play out and the NVT signal remain below red-flag thresholds, Bitcoin's momentum may gain speed rapidly, shaking out naysayers and pushing new price highs higher than $110,000.

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