Bitcoin prices hover above $76,000 amidst a significant buildup of leveraged short positions near $80,000. Persistent spot market accumulation from ETFs and Strategy provides a price floor, while negative funding rates and cautious options skews suggest bearish sentiment. Analysts suggest upcoming Federal Reserve policy decisions and inflation data could trigger a short squeeze if Bitcoin reclaims $80,000.
Bitcoin price sustained levels above $76,000 for the past week, distancing itself from its year low at $60,500. The recent momentum came as crude oil prices jumped above $100 and the S&P 500 hit new trading highs.
A total of $1.4 billion in leveraged short positions near $80,000 has been built over the past 48 hours, according to CoinGlass data. Bitcoin’s rejection at $79,500 has raised alarm among traders.
The lack of investors’ appetite for bullish Bitcoin leverage has been evident. A bear trap could spring if the US Federal Reserve adopts a less restrictive monetary policy or if investors anticipate higher inflation.
The Bitcoin perpetual futures annualized funding rate has remained mostly negative over the past two weeks. This is a typical sign of growing bearish confidence, even as most of those bets are at a loss at the current price.
Data show investors are no longer anticipating interest rate hikes from the Fed, even as Brent crude prices have reclaimed the $100 level. US government bond futures contracts presently indicate 20% odds of interest rates decreasing by September.
Bitcoin’s bullish momentum has been driven by the spot market. This is evidenced by Strategy adding $255 million in BTC between April 20 to April 26 and the $824 million net inflows into US-listed Bitcoin exchange-traded funds.
The Bitcoin options delta skew shows put options trading at an 11% premium relative to call options, consistent with a bearish market. Whales and market makers are uncomfortable with downside risk, reinforcing the thesis of a potential bear trap.
Further Bitcoin bullish momentum remains far from certain. As long as spot market demand remains strong, the pressure on short positions may continue to mount.
