Key Takeaways
Is it too early to bet against Bitcoin?
Short positions are piling up, but spot demand remains high. With liquidity building, Bitcoin’s fade here is bold. However, the situation could lead to a short squeeze.
What influence do institutional flows have on the market?
BlackRock’s IBIT ETF is absorbing 84% of this month’s $5 billion inflows, which contrasts with mid-August outflows, making leveraged shorting a risky play.
Is it too early to take action against Bitcoin? [BTC]? On a weekly basis, BTC exhibits classic post-ATH behavior. The last two ATHs of $123,000 and $124,000 in the third quarter both pushed red candles, with an average decline of -1.5%.
A similar pattern appears to be repeating itself.
After starting the week with the longest wick reaching an ATH of $125k, the candle is already 1.3% in the red, while the lowest wick reaches $119k. In short: betting on Bitcoin could be a strategically sound move.
Source: Coinglass
In support of this, derivatives still remain on the short side with 55% of positions betting on Bitcoin. In fact, that’s a +4% jump from the previous day, marking the steepest short skew we’ve seen in a month.
Furthermore, nothing underlines this more than AMBCrypto’s recent report highlighting a massive $420 million short position opened by an OG BTC whale at $120,678, showing that smart money is bracing for a repeat post-ATH flush.
However, since BTC was trading at $121,600 at the time of writing, this position has an unrealized loss of 0.76%. That’s roughly $3.2 million on the books, rerepeating the question: is it too early to bet against BTC?
BlackRock’s bid increases tension on Bitcoin shorts
Institutional outflow hitting BTC ETFs as fear creeps in.
That said, BlackRock’s IBIT spot ETF is still generating immediate inflows, taking 84% of this month’s $5 billion. Technically, almost $4.2 billion is flowing in, making IBIT a major bid and a major catalyst for Bitcoin.
This is a particularly sharp difference from mid-August, when IBIT accounted for 70% of the $800 million in outflows, sending Bitcoin to two weekly reds and Bitcoin falling 9% from its all-time high of $124,000.
Source: SoSo value
Against this backdrop, stacking shorts with leverage is a risky play.
Analyst Aixbt echoed shares the same view, calling shorting ETFs’ high inflows and low profit-taking a “bold move,” with greed driving traders to bet on a quick pop rather than a sustained downtrend.
In fact, that’s $120.96 million in short liquidity stacked about $121.8k, which shows how much short-term juice has piled up. However, with bids still solid, BTC consolidation is starting to develop into a bullish setup for a potential short squeeze.