Bitcoin’s 46-Day Bearish Streak Risks a Cascading Short Squeeze

Traders betting against Bitcoin may soon face mounting losses that force them to buy back their positions all at once, potentially triggering a cascading price spike. This risk is the result of a 46-day streak of negative funding rates on perpetual futures, one of the longest bearish stretches on record, matching a streak seen during the 2022 FTX collapse.

Leveraged traders have spent the last six weeks actively building short positions. This positioning creates a high risk of a short squeeze if upward momentum persists. The market is currently experiencing a a wide gap between spot markets and derivatives traders, who have remained bearish while Bitcoin has rallied 14% from its April low.

Several institutional catalysts are driving the price higher. US-listed spot Bitcoin ETFs absorbed more than $800 million in the past week, a sharp reversal from earlier outflows. Net inflows reached $332 million this week, adding $26 million on Thursday. Strategy posted two purchases totaling $2.6 billion in the past two weeks. Goldman Sachs filed for a Bitcoin ETF this week, and Morgan Stanley launched a Bitcoin-tracking ETF last week. Charles Schwab announced plans to launch spot crypto trading this year, suggesting clients could allocate up to 8.8% of a portfolio to Bitcoin.

Technically, Bitcoin broke above a descending trendline and the 100 EMA at $75,283. The MACD line crossed decisively above the signal line, marking the most bullish crossover on the daily since the bull run peak. While options dealers may sell into the rally at $80,000, a break above $76,000 could see Bitcoin extend toward $85,000.