I just noticed that Bitcoin recently surpassed the $75,000 mark and is currently around $77,890, but there's something quite strange - the spot price is rising while short traders still have to pay fees to hold their positions. This has been happening for about a month and a half and is one of the rarest occurrences this year.

Actually, the issue here is that the funding rate on perpetual contracts remains negative, meaning those shorting Bitcoin are losing money but haven't given up yet. I saw Bloomberg mention that this resembles a classic short squeeze situation - as Bitcoin continues to rise, short sellers will be forced to buy back their positions, creating a sudden upward surge that reinforces itself. The longer this situation persists, the more intense the final breakout will be.

There are some positive signals supporting the price. MicroStrategy has just bought an additional $2.6 billion worth of Bitcoin in the past two weeks, and US spot ETF funds have attracted over $800 million just this week. Additionally, Charles Schwab announced it will launch spot crypto trading this year. Every new influx of money pushes the price higher, and the costs for short sellers also increase, creating mounting pressure to tighten the squeeze.

Vetle Lunde from K33 told Bloomberg that traders are actively building short positions to resist the breakout, but this also makes a short squeeze more likely to happen. Spot liquidity appears to be quite thin, so any move could quickly spread through derivatives.

However, short Bitcoin traders still have a chance if this rally collapses. Data from Deribit shows options traders are paying more to hedge against downside risk, with notable put volume around $60,000 and $50,000. Laurens Fraussen from Kaiko believes that if Bitcoin breaks above $76,000, it could rise to $85,000. But the short-term risk is a potential short squeeze that could happen at any moment if capital continues to flow in.