Short positions reach an extreme level on Bitcoin
Bitcoin is going through a critical phase. Short positions on centralized exchanges have reached unprecedented levels since August 2024, while the crypto queen oscillates around $66,500. This phenomenon, often a precursor of major reversals, could it mark the beginning of a new bullish cycle?
In brief
- Short positions on Bitcoin have reached record levels, with a price hovering around $66,500 after a 47.3% drop since October 2025.
- Negative funding rates and the MVRV ratio at 1.1 suggest a potential rebound of 50% to 80% for Bitcoin, as in 2025.
- Bitcoin investors should monitor key levels ($59,000, $75,000) and avoid excessive leverage to limit risks.
Bitcoin: why are short positions exploding?
Since August 2024, short positions on Bitcoin have experienced rapid growth, reaching historic highs. At that time, BTC had dropped to $55,000 before rebounding four months later to $106,000 in December 2024. Today, after a 47.3% drop from its October 2025 peak, will the same scenario repeat?
According to recent data, futures funding rates are deeply negative. Additionally, traders pay up to 0.05% per hour to maintain their short positions, a rarely seen level. This dynamic reflects a strongly bearish market sentiment, fueled by fears of a prolonged recession and regulatory uncertainties.
Is a bitcoin rebound in sight?
Bitcoin’s history shows that phases of extreme pessimism often precede spectacular rebounds. In October 2025, a massive $19 billion liquidation of long positions caused BTC to drop 20% in a few hours. Yet, in the following four months, it rebounded 83%, moving from $55,000 to $106,000.
Today, the MVRV ratio is 1.1, a level historically associated with buying opportunities. Analysts at Santiment note that if short position liquidations reach the scale of those in October 2025, a 50% to 80% rebound could occur. However, the market remains unpredictable. If bitcoin falls below $59,000, losses could accelerate!
Strategies and risks to know on BTC
Faced with Bitcoin’s volatility, investors must adopt a cautious and informed approach. For those anticipating a rebound, covering short positions or buying gradually can be a wise strategy. However, excessive leverage and FOMO (fear of missing out) remain traps to avoid.
However, the market is full of analytical tools that allow real-time tracking of funding rates and liquidation levels. Diversifying one’s portfolio and limiting exposure to volatile assets remains essential. The coming weeks will therefore be decisive in confirming or denying a trend reversal.
Bitcoin stands at a crossroads. Extreme short positions could signal a historic rebound, but uncertainty persists. The next few days will be crucial. Do you think BTC is on the verge of a new bullish cycle, or are these short levels just a trap for optimistic investors?
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The world is evolving and adaptation is the best weapon to survive in this undulating universe. Originally a crypto community manager, I am interested in anything that is directly or indirectly related to blockchain and its derivatives. To share my experience and promote a field that I am passionate about, nothing is better than writing informative and relaxed articles.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.