Bitcoin Surges 4.8% to New All-Time High Above $110,000

Bitcoin (BTC) surged to a new all-time high above $110,000 on Thursday, triggering the liquidation of approximately $500 million in derivatives positions. Despite this bullish momentum, a significant number of traders are adopting a bearish stance, opting to short the cryptocurrency, which involves betting on its price decline.

Data from Coinalyze indicates that the long/short ratio has reached its lowest point since September 2022, a period marked by the crypto winter. This trend began on April 21, as traders aggressively shorted the breakout above $85,000, under the assumption that Bitcoin had already reached its cycle high and that any further movement would result in a double top.

However, despite a lack of retail participation, Bitcoin continued its upward trajectory, surpassing resistance levels at $97,000 and $105,000. This movement can be attributed to several factors, including a recovery in U.S. equities as tariff concerns eased, increased institutional activity on exchanges, and a substantial number of short positions that were squeezed, driving prices higher.

While these short positions may initially seem bearish in terms of market structure, they are actually contributing to the upward momentum. This is because they provide bullish traders with specific levels to target and conduct stop-loss hunts, as seen earlier this week. Shorting an asset at its record high is not necessarily a poor strategy; traders often enter short positions at levels of resistance, whether technical or psychological, and place stop losses above where the short trade thesis would be invalidated.

For instance, if a trader shorted at $105,000 during each of Bitcoin's three tests of that level, they could have closed their position in profit on three occasions at $102,000. Even if they were stopped out of the trade at $109,000, it would still result in a profitable week. Alongside the continued rise in short positions, open interest in Bitcoin has jumped disproportionately. Over the past 24 hours, Bitcoin is up 4.8% while open interest is up by 17%, despite hundreds of millions being liquidated.

This indicates that the record high break is driven by leverage and might be less sustainable than the initial drives above $100,000 in December and January. It remains to be seen whether interest in short positions will continue to rise if Bitcoin maintains its momentum above $111,000. However, there is certainly a significant number of short positions that could be squeezed if additional upward pressure is needed.