$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 increase 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 are liquidated or have to manually cut losses, forcing them to buy back to close their positions.

This collective buying pushes 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 one side", the market tends to go against the crowd.

Market makers or sharks will counter to hunt for liquidations and profit.

3. Strong support zones or unexpected news:

If the price touches a solid support zone or there is unexpected good news, buyers will counterattack, causing a squeeze.

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What to do when the market is at risk of a short squeeze?

Always set clear stop losses.

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 falling into crowd traps.