The Short Squeeze Isn't the Signal. Don't Confuse the Two.
Crypto Myth of the Week | Market Pulse Special | February 26, 2026 | 🔒 Paid
Let me tell you what happened yesterday — and what didn’t.
Bitcoin was sitting at $63,000 on Monday morning. Extreme fear. The Crypto Fear & Greed Index had been pinned near 10 for most of February — a reading that low hadn’t been seen since the depths of the 2022 bear market. Traders who had bought Bitcoin at $90,000, $100,000, and $110,000 were sitting on losses. ETF outflows had been running for weeks. Sentiment was as bad as it’s been in years.
In that environment, something predictable happened: traders piled into short positions. When everyone is scared, the crowded trade is the bearish bet. Short sellers were paying longs to maintain positions — what’s called negative funding rates — which is a textbook signal that bearish positioning had become dangerously crowded.
