Bitcoin Surges 5% to $108,000 on Mortgage Payment Approval, Retail Traders Turn Bearish

Bitcoin's price surged to $108,000 on the 25th of June, following the U.S. Federal Housing Finance Agency's approval of BTC for mortgage payments. Despite this rally, retail traders have adopted a bearish stance, increasing their short positions across exchanges. This trend is evident in the sharp decline of the Retail Long/Short Ratio, which indicates a rise in short activity. The Funding Rate has also turned negative, reflecting the bearish sentiment among retail traders.

The bearish sentiment among retail traders is not isolated to one metric. The Leveraged Traders’ Sentiment ratio has also dropped close to 1, suggesting that speculators anticipate a downside, even as BTC holds above $107,000. This divergence between sentiment metrics and price began around the 22nd of June when BTC touched $102,400. This sets the stage for potential short liquidations if the buying pressure holds.

In contrast to retail sentiment, institutional investors continue to accumulate Bitcoin. In the past 24 hours, institutional investors have bought $547.70 million worth of Bitcoin, mainly through spot Bitcoin ETFs. This buying trend has persisted through the week, with more than $1.48 billion spent on Bitcoin purchases. Such a large inflow suggests capital rotation from traditional markets into crypto, likely in anticipation of a major price rally.

The Fund Market Premium, used to assess sentiment in Bitcoin investment products, has also entered positive territory with a reading of 0.17. Historically, an increase in Fund Market Premiums has aligned with Bitcoin price rallies, hinting at a possible upward move ahead. If institutional buying persists and BTC maintains its current levels, retail short-sellers could face significant losses. Given the scale of leveraged shorts, a sudden upside burst could trigger a cascade of liquidations, putting retail traders at risk of being liquidated at any moment.