Key Points
- Bitcoin’s recent retracement has led to an increase in short bets.
- With over 96.6% of Bitcoin’s supply in unrealized profit, this could be a strategic setup for a high-volatility breakout.
Bitcoin [BTC] has recently experienced a retracement, leading to a cautious bounce and an increase in short bets.
The retracement to the psychological $100k level did not result in an aggressive bull charge as expected. Instead, the bounce has been underwhelming, leading to a rise in short bias on Binance’s BTC/USDT perpetuals.
Strategic Consolidation or Weakness?
This pause in momentum could be a strategic consolidation, setting the stage for a high-volatility breakout. Currently, 96.6% of Bitcoin’s supply is in unrealized profit, and the short-term holder (STH) supply has pulled back to November 2024 levels.
The increasing short bias could be a calculated move, with short-sellers anticipating a reversion setup due to a lack of directional momentum. The lack of clear direction leaves room for a pullback, which shorts are keen to capitalize on.
Market Tension and Potential Breakout
Bitcoin has been consolidating below the $106k–$107k zone for over a week, reinforcing it as a key resistance ceiling. As longs continue to be flushed out and institutional money remains on the sidelines, shorts are growing more confident of a correction.
However, each short bet also sets the stage for a squeeze. The longer BTC consolidates without breaking down, the more explosive the potential breakout could be. Over $1 billion in shorts stacked just above $107k could act as a launchpad if bulls decide to push through.
On-chain metrics confirm strong HODLing behavior, underscoring the supply squeeze narrative. This consolidation might not be indecision, but a trap being set to lure in more shorts before unleashing a squeeze and unlocking higher targets.
