Traders betting against Bitcoin just got burned. But there are still bears.

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Bitcoin prices have skyrocketed recently. The time of dreams

A strong Bitcoin rally has left traders betting against crypto prices licking their wounds, but there remains a significant number of bearish traders.

Bitcoin prices have risen around 20% in a matter of days, from $17,500 less than a week ago to $21,000. Sitting around $20,800 on Monday, the biggest cryptocurrency hit its highest levels since the collapse of crypto exchange FTX in November, which slammed markets and sent Bitcoin to a two-year low of 15 $500 at one time.

An increase in risk appetite sparked a surge in Bitcoin, which spent the final weeks of last year languishing between $16,000 and $17,000. It’s up more than 25% year-to-date, topping $20,000, said Craig Erlam, an analyst at brokerage Oanda.

Whether this is a sign of a bottom and resurgence or just a brief rebound is unclear, but there are clearly still some very bullish traders out there. It should make for an interesting few weeks.

The violent upward movement caused pain for traders who bet against Bitcoin with so-called short positions. These trades are made in the Bitcoin perpetual futures market, which is the most liquid of all cryptos. Traders often take short positions with margin or borrowed money, and can be forcibly closed by brokers if the market turns against them in a process called liquidation.

Since Jan. 11, when Bitcoin was trading below $17,500, more than $355 million in short Bitcoin positions have been liquidated, according to crypto data firm Coinglass. Across the crypto landscape, $1.1 billion worth of shorts have been wiped out over the same period, according to Coinglass.

And yet, there are still more people shorting Bitcoin than taking bullish bets that prices will continue to rise.

In the five days between Jan. 11 and Jan. 15, when Bitcoin soared 20%, there were more long bets than short ones, according to data from Coinglass, which supports the trend of a big bull rally. However, by Monday that trend had changed, with over 50% of all Bitcoin perpetual futures positions being short in Bitcoin.

This could be a sign that more pain is coming for the bears if Bitcoin continues to rise. Or it could be an indication that the market thinks there has been enough momentum for the time being and prices might pare gains slightly.

Write to Jack Denton at [email protected]

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