Bitcoin’s 55% short skew sparks debate: Hedge or hype?

Key Takeaways

Is it still too early to bet against Bitcoin?

Shorts are piling up, but spot demand remains strong. With liquidity building, fading Bitcoin here is bold. However, the setup could trigger a short squeeze.

How are institutional flows impacting the market?

BlackRock’s IBIT ETF is soaking up 84% of this month’s $5 billion inflows, contrasting mid-August outflows, making leveraged shorting a risky play.

Is it still too early to move against Bitcoin [BTC]? Weekly, BTC’s showing classic post-ATH behavior. The last two ATHs at $123k and $124k in Q3 both printed red candles, averaging a -1.5% pullback.  

A similar pattern appears to be repeating. 

After kicking off the week with the longest wick stretching to a $125k ATH, the candle is already 1.3% in the red, with the lowest wick reaching $119k. In short, betting against Bitcoin could be a strategically sound move.

Backing this up, derivatives remain skewed to the short side, with 55% of positions betting against Bitcoin. In fact, that’s a +4% jump from the previous day, marking the steepest short skew we’ve seen in a month.

Moreover, nothing underscores this more than AMBCrypto’s recent report, highlighting a massive $420 million short opened by an OG BTC whale at $120,678, showing smart money is bracing for a repeat post-ATH flush.

However, with BTC trading at $121,600 at press time, that position is sitting on a 0.76% unrealized loss. That’s roughly $3.2 million bleeding on the books, reiterating the question: Is it still too early to bet against BTC?

BlackRock bid turns the heat up on Bitcoin shorts

Institutional outflows are hitting BTC ETFs as fear creeps in. 

That said, BlackRock’s IBIT spot ETF is still racking up straight inflows, taking 84% of this month’s $5 billion. Technically, that’s nearly $4.2 billion flowing in, making IBIT a key bid and a major catalyst for Bitcoin.

Notably, that’s a sharp divergence from mid-August, when IBIT made up 70% of $800 million in outflows, which slammed two weekly reds and sent Bitcoin down 9% from its $124k all-time high.

Against this backdrop, stacking leveraged shorts is a risky play. 

Analyst Aixbt echoed the same view, calling shorting into heavy ETF inflows and low profit-taking a “bold move,” with greed pushing traders to bet on a quick pop rather than sustained downside.

In fact, $120.96 million in short liquidity is stacked around $121.8k, showing how much near-term juice is piled up. However, with bids still solid, BTC’s consolidation is shaping up as a bullish setup for a potential short squeeze.