Bitcoin Shorts Pile Up Ahead of CPI: Will It Trigger a Bear Trap?

Bitcoin's price action in the next 24 hours could be pivotal for the crypto market, according to recent data.

A combined short position of $343 million worth of Bitcoin has been opened by four traders on Lookonchain, with liquidation levels between $64k and $66k. This suggests that perp traders are expecting strong resistance around $66k, making it a key level to watch given the current setup.

Bitcoin has been chopping around $65k for over seven weeks now, marking its strongest weekly consolidation since Q4 2025. However, with ETF flows still strong, a heavily crowded shorts could set up the conditions for a squeeze if Bitcoin breaks above resistance.

The positioning of whales against Bitcoin is adding to the broader bearish sentiment, but it's not entirely random. According to Glassnode, Bitcoin hasn't hit key bottom levels yet, which suggests that while selling pressure is cooling off, it hasn't reached the 'extreme' exhaustion levels seen during previous Bitcoin bear markets.

The next 24 hours are particularly important for Bitcoin, as the upcoming CPI report could become a key catalyst for risk assets. Markets are pricing in a 49.9% chance of a rate hike and a 50.1% chance of a rate cut at the FOMC meeting, making it a 50-50 split on the rate outlook.

If inflation comes in 'hotter-than-expected', capital could flow into gold further, putting pressure on Bitcoin. However, market analysts are still leaning toward a dovish stance, especially if the upcoming CPI print comes in soft, which could strengthen the case for rate cuts and provide some relief for risk assets.

A breakout above resistance doesn't look unlikely, with Bitcoin shorts building across the board. The next 24 hours could be highly consequential, potentially setting up one of the biggest bear traps of the cycle.