Bitcoin Shorts Rise as Institutional ETF Demand Fades, $85K Range in Focus
Short sellers increased positions as Bitcoin faced intensified selling into late 2025 after a 23% Q4 drop. On-chain and derivatives metrics show bearish dominance: the Taker Buy/Sell Ratio fell to multi-month lows, U.S. spot Bitcoin ETFs recorded consecutive net outflows since Dec. 18, and CME Bitcoin futures open interest slipped below $10 billion — the weakest since Sept. 2024 — signaling waning institutional exposure. The previously profitable basis trade (buy spot ETF, short CME futures), which once yielded up to ~10%, has seen yields compress to about ~5%, reducing its appeal to hedge funds and contributing to reduced ETF demand. Options and derivatives positioning shows concentrated downside hedges near $85,000 and upside interest around $88,000–$90,000. CoinGlass data indicates roughly $3 billion of leveraged short liquidations could be triggered if BTC reclaims about $90,600, while leveraged long liquidation clusters sit near $83,900 and $86,100. Analysts warn that absent fresh catalysts — regulatory clarity, macro improvements, or renewed retail inflows — Bitcoin could remain range-bound with a downside bias and may test sub-$80,000 in early 2026. Traders should monitor ETF flows, CME open interest, the taker buy/sell ratio, and key liquidation levels for short-term volatility and potential squeeze scenarios.
Bearish
The combined evidence points to a bearish outlook for BTC price in the near term. Key institutional indicators — consecutive net outflows from U.S. spot Bitcoin ETFs, reduced CME futures open interest below $10bn, and a falling Taker Buy/Sell Ratio — signal declining buying pressure from both retail and institutional participants. The compression and partial collapse of the basis trade (ETF carry trade) removed a significant source of institutional demand, lowering a structural support for price. Derivatives positioning is mixed but tilted toward downside: concentrated options and hedge activity around $85,000 suggest protective or directional bets for a drop, while large clusters of leveraged longs have liquidation levels below $86,100 that could accelerate downside if breached. Offsetting this are meaningful short positions near $90,600 that create a potential squeeze upside if BTC rallies above that level, but that scenario requires a catalyst and may be short-lived given the broader drop in liquidity and flows. Overall, absent new positive catalysts (regulatory clarity, macro tailwinds, or fresh retail inflows), the balance of risks favors range-bound action with downside bias and the possibility of testing sub-$80K. Traders should watch ETF flows, CME open interest, taker ratio, and clustered liquidation levels to manage risk and to identify squeeze opportunities.