When you 'short BTC' in the futures market, it means you are betting that the price of Bitcoin will decrease. However, sometimes you short BTC and the price increases afterward. This can be confusing, but the reasons usually stem from the following factors:
1. Market effect contrary to the expectations of the majority
If too many people are shorting BTC (meaning the number of short positions is very high), the market may move in the opposite direction (increase in price) due to:
Short squeeze: When the price of BTC starts to increase slightly, those who are short incur losses and are forced to close their positions (buy back to cut losses). This creates additional buying pressure, causing the price to rise even more.
Market psychology: Financial markets often move against the majority of retail investors when they are overly biased in one direction.
2. News, unexpected events
The price of BTC can increase due to:
A positive news story about BTC or the crypto market (ETF, policies, technology…)
Events from traditional financial markets that cause capital to flow into risk assets like crypto.
3. Technical analysis being invalidated
You may short based on technical signals (for example: resistance, high RSI…), but if there is a sudden strong fluctuation, the technical pattern may become invalid.
4. Market makers and whales
Big players can push the price up to 'shake off' those who are short (trigger stop losses), and then pull the price down. This is a common strategy in illiquid markets.
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In summary: The situation where you short and the price increases is entirely possible in the futures market. That is why risk management and setting reasonable stop losses are very important when trading.
