The Bitcoin exchange-traded fund BITI, which provides investors with shorts on BTC, reported a significant increase in such positions of 300%. The turmoil in the cryptocurrency market is attracting bears who want to profit from cheapening digital assets.
At the moment, bitcoin has lost more than 70% of its value relative to ATH, which is associated with a massive outflow of funds from the industry after a series of rate hikes by the Federal Reserve. As a result, investors are turning away from risky assets, including bitcoin.
The BITI ETF became the second-largest bitcoin-linked fund in the U.S. in just four days of trading. The main reason for the explosive growth is the price decline in the cryptocurrency market. BITI currently has 3,811 BTC under management.
During the 2018 downtrend, bitcoin lost 83% of its value relative to ATH, but after that there was a solid reversal. Drawing an analogy with the current situation, it is clear that the current bearish rally is coming to an end, and most likely in the coming months or even weeks BTC will enter a prolonged consolidation.
As a rule, traders avoid short positions because they are more risky than long ones, given the limited profit potential for any asset type and unlimited loss potential. Any trader who shorted bitcoin at the very beginning of 2018 would face catastrophic losses and liquidation.