Short interest on BTC and ETH hit an all time high today as prices dropped to 2018 lows. Short interest generally shows sentiment (bearish in this case), but it also can be a set up for a short squeeze (like in April).
In other words,
- It is a fact that short interest is at a recorded high on BTC and ETH against USDT on Bitfinex (at least this is the highest I’ve seen viewing tradingview data; see links in the introduction).
- It is accepted that high short interest correlates with a bearish sentiment.
- It is sometimes the case that when short interest is high, a quick trend reversal can be magnified by a “short squeeze.” A short squeeze is when a rapidly rising price forces shorts to close their positions which results in market buys being executed, which pushes the price up, forces more shorts to close, and then forces more market buys.
Given the rather intense downtrend and dismal 2018, hoping for a short squeeze is very likely wishful thinking… However, the record high shorts are worth noting regardless of what the implication is, as a record high anything in crypto is always a milestone worth reporting in my opinion.