Hedge funds are increasingly betting against bitcoin, with their short positions hitting a new record high, according to a report by Bloomberg citing the latest Commitments of Traders report from the Commodity Futures Trading Commission.

On 7 June, bitcoin fell from close to $72,000 to $68,450 before staging a slight recovery at above $69,000, and the increase in wagers against the cryptocurrency suggests that managers are betting heavily on a further fall in value.

Such bearish sentiment can influence broader market trends, potentially leading to increased volatility and downward pressure on bitcoin prices benefiting the short sellers.

Conversely, a sudden rise in bitcoin’s price could lead to substantial financial losses for hedge funds with short positions, possibly triggering a short squeeze that further drives up the price as they buy back their positions to limit losses.