Why is the pancake rising while everyone is shorting?

This is an interesting and common market phenomenon: the price of BTC (Bitcoin) is rising, but there are generally a large number of short positions in the market. The reasons for this 'counter-trend shorting' may include the following aspects:

1. Investors expect a pullback

Many people believe that the current rise is 'overbought' or a 'false rise', anticipating a technical pullback soon, so they 'short at high points' during the rise, hoping to profit when prices fall.

2. Institutions and retail investors are at odds

Many retail investors in the market 'chase up' when they see a rise, but some institutional investors short against the trend, using retail sentiment to build short positions, thereby creating a 'short squeeze' to make a profit.

3. Funding Rate mechanism

In cryptocurrency futures trading, the funding rate is a key indicator:

If most people are long, the longs have to pay interest to the shorts.

If most people are short, the shorts have to pay interest to the longs.

Experienced traders will use this mechanism to arbitrage: when the entire market is shorting, going long can continuously earn interest, so they go against the trend.

4. Shorting for hedging or locking positions

Some funds are held by investors in the spot market with BTC, and they short futures/contracts to hedge risk — this behavior is not about being bearish on the market, but rather a risk management strategy.

5. A short squeeze is occurring

If many people are shorting while BTC is rising, it can trigger a large-scale liquidation, further pushing up the price, which forms the so-called 'short squeeze', where the price rise further exacerbates short liquidations.

Summary

Everyone shorting does not necessarily mean that the price will fall; instead, it may push up the price due to excessive shorting being 'squeezed out'. The trading behavior in the short-term market is often a contest of emotions and strategies, rather than a simple rise = bullish, fall = bearish.