3 reasons it won't stop the rally

5, many trades in the Bitcoin futures market have been seemingly net short.

The large amounts of shorts in the market are fueling the recovery of BTC for three reasons.

The three factors are low funding rates, the likelihood of a short squeeze, and the implications of defending the $10,000 support level.

The Bitcoin futures market implements a mechanism called "Funding." In a nutshell, funding incentivizes traders longing BTC or betting on it to increase in price if the market is majority short, and vice versa.

If BTC doesn't drop but funding rates remain low, short contract holders don't have an incentive to hold onto shorts.

Eventually, short holders adjust their positions, which requires them to market buy BTC. The whole process causes the demand for BTC to increase in the short term.

Mohit Sorout, the founding partner of Bitazu Capital, similarly said that shorts paid longs on Binance in the last 24 hours.

The term open interest refers to the total amount of long and short contracts open in the market.

Since open interest was low, a major short squeeze was unlikely to occur.

The upsurge indicates that a minor short squeeze is currently occurring, neutralizing the futures market.