Caution Prevails as Bitcoin Nears All-Time High

Bitcoin is nearing its all-time high, with prices exceeding $110,000. Despite this strong performance, the market sentiment remains cautious rather than euphoric. Many traders are currently positioning themselves for a potential short-term decline in price—an unusual stance given Bitcoin’s proximity to record highs.

Despite surpassing $110,000, rising short positions and weak technical signals suggest Bitcoin traders expect a pullback

Short positions are rising notably. According to Coinalyze, while Bitcoin climbed from $106,000 to over $110,000 in recent days, the long/short ratio dropped sharply. It fell from 1.223, indicating a dominance of long positions, to 0.858, reflecting a clear short overhang. This shift shows that more market participants are betting on falling prices in the short term.

At the same time, open interest in Bitcoin derivatives—capital tied up in contracts—rose from $32 billion to $35 billion. This increase suggests more money is flowing into the market, particularly toward short positions. However, funding rates remain positive, which means that long positions are still present and active in the market.

Since May, Bitcoin has been trading in a narrow band between $100,000 and $110,000. This tight range has seen multiple tests of both support and resistance levels, each occurring three times. Even though the price is close to its all-time high, Bitcoin has not yet shown the strength needed to break out decisively to the upside.

Technical indicators are also flashing warning signs. The Relative Strength Index (RSI), a commonly used momentum indicator, has been weakening with each attempt to move above the $110,000 mark. This pattern forms a bearish divergence, where the price makes higher highs but momentum fails to follow—a classic signal of a potential correction. Traders often take advantage of such signals for short-term strategies, seeking quick profits from pullbacks.

In conclusion, despite Bitcoin’s strong performance, caution dominates the current market outlook. The notable increase in short positions and bearish signals from technical indicators suggest that traders should remain alert. While a breakout above the current range is still possible, the risk of short-term corrections remains high. Many experienced traders are actively exploiting this setup, betting on pullbacks even as Bitcoin trades near record levels.

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(Featured image by Kanchanara via Unsplash)

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