A bitcoin short squeeze for the ages as futures open interest collapses

A dramatic collapse in bitcoin futures open interest—driven by forced liquidations of short positions—produced a historic short squeeze that sent the spot price sharply higher. The rapid deleveraging removed a large portion of short-side leverage, pushed funding rates sharply and wiped out concentrated bets on lower prices. Implication: with much of the leveraged short exposure gone, near-term downside from forced selling is diminished, but the market is now more susceptible to outsized volatility and further squeezes if crowded positioning re-accumulates.