Bitcoin Hedge Fund Net Shorts Surge to Record High, Analysts Forecast 30% Decline

Bhushan Akolkar
June 8, 2024 Updated October 22, 2024
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Bitcoin BTC short term price

Highlights

  • There's a dramatic increase in Bitcoin hedge fund net shorts, reaching an all-time high.
  • BTC price needs to maintain the crucial support level at $68,500 for its upward trajectory.
  • Analyst Alan Santana forecasts that a bearish wave expecting the BTC price correction ahead.

The world’s largest cryptocurrency, Bitcoin (BTC), along with the broader cryptocurrency market, has faced significant selling pressure. BTC lost its support at $71,000 and dropped to $68,500. Currently, the Bitcoin price is trading at $69,404.43 with a market cap of $1.37 trillion

Bitcoin Hedge Funds Net Shorts At Record High

Analyst Zerohedge has reported a substantial increase in Bitcoin hedge fund net shorts, reaching a new record high.

Zerohedge remarked, “Big jump and a new record high in Bitcoin hedge fund net shorts. When this snaps, it will make Volkswagen/GME look like amateur hour.”

This surge in net shorts suggests a highly bearish sentiment among hedge funds, indicating a potential for significant market volatility if these positions are forced to unwind. The situation draws parallels to historic short squeezes, such as those seen with Volkswagen and GameStop (GME), implying that a similar dramatic shift could occur in the Bitcoin market.

Bitcoin and the rest of the crypto market came crashing down as the meme stock rally ends. On Friday, the GameStop (NYSE: GME) share price fell by a massive 41% as soon as Roaring Kitty went live.

Will the BTC Price Correct Further?

Crypto analyst Ali Martinez has identified a key support level for Bitcoin, emphasizing its importance for the cryptocurrency’s future trajectory.

Martinez stated, “The most crucial support level for Bitcoin is now at $68,500! If BTC maintains this level, it’s up only from here”. According to Martinez, maintaining the $68,500 support level is vital for Bitcoin’s continued upward movement.

Courtesy: Ali Martinez

Prolonged bullish trends typically lead to substantial downward corrections. Historical data indicates that after an extended bullish phase, a rapid and sharp bearish wave often follows. Analyst Alan Santana predicts that this bearish wave could occur at a speed 2 to 2.5 times faster than the preceding bullish rally.

He explained: “When the upward potential of the market is perceived to be exhausted, investors are more likely to exit quickly. Unlike the gradual accumulation during a bullish phase, the sell-off during a correction happens rapidly, leading to a steep decline.”

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.