BTCUSDSHORTS is an index of the number of leveraged shorts for BTC on the exchange.
This peaked recently at 40k and dropped very fast when BTC rallied from 6.8k to 8k. The reason the price rallies so hard in a short squeeze is because leveraged shorts have to cover - essentially market buying the underlying - forcing the price up faster than expected.
BTCUSDSHORTS has painted a nice rising wedge (bearish chart pattern) and fallen out of it. ITs attempting to recapture the breakdown. If this was a stock, index, or future it would be a short - essentially short the shorts.
How will it play out for this index though? Its not a stock index or future, its an index of number of short sellers.
if the index drops then expect BTC price to rise sharply once again. Timescale, next ~1-2 weeks
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according to the mild drop in shorts, the fun hasn't started yet for BTC/USD