Bitcoin Shorts Surge 20% as Retail Traders Bet Against Rally

Bears are piling in… just as Bitcoin [BTC] starts to climb. In a classic twist, retail traders are ramping up short positions, betting against the rally. But history suggests this crowd may once again be early victims of a squeeze.

As bearish sentiment peaks, the stage could be set for yet another painful upside surprise. Retail shorts on the rise. The Leveraged Traders’ Sentiment indicator, which combines Funding Rates and Long/Short Ratios by position and account, is flashing a strong contrarian signal. Retail traders are betting against Bitcoin, with short positions surging despite the price rising. The chart shows bearish sentiment dipping as BTC rallies, highlighting a potential market imbalance. Historically, overcrowded short trades often lead to sharp reversals, not due to consensus, but as the market punishes extreme positioning.

This isn’t the first time retail traders have bet against the trend… and lost. In May, a similar sentiment shift unfolded as retail short positions surged, only to be liquidated, triggering a fast-paced rally. Now, bearish positioning is growing more aggressive, even as Bitcoin’s price holds strong. This pattern closely resembles the earlier setup, suggesting another potential short squeeze. If overleveraged shorts remain on the wrong side of the trade, another rapid price surge could follow.