$BTC This is a common phenomenon in the derivatives market and it relates to 'short squeeze' (forcing short positions to close).

Why does the price go up when there are too many short positions?

1. Short squeeze – Forcing sell positions to buy back:

When there are too many short sellers, if the price rises against them, these individuals incur losses.

Many of them get liquidated or have to manually cut losses, forcing them to buy back to close their positions.

This collective buying drives the price up quickly and strongly, creating a pump contrary to the initial expectations.

2. Market sentiment is skewed:

When 'too many people are on the same side', the market easily moves against the crowd.

Market makers or whales will push back to hunt liquidations and profit.

3. Strong support zones or unexpected news:

If the price hits a strong support zone or there is unexpectedly good news, the buying side will counterattack, causing a squeeze.

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What to do when the market risks a short squeeze?

Always set a clear stop loss.

Do not go all-in or hold positions too deeply without a plan.

Monitor the funding rate and the long/short ratio in the market to avoid getting caught in the crowd trap.