Morgan Stanley: BTC May Be Undergoing a Short Squeeze, with Short Covering Driving Prices Higher

Odaily Planet Daily reported that Morgan Stanley's cryptocurrency strategy team pointed out that when traders use leveraged instruments to bet on a decline in Bitcoin, a sustained price increase puts their margin accounts at risk of liquidation. In such cases, they are forced to urgently buy back Bitcoin from the market to close their positions. This concentrated buyback activity, in turn, further drives up the price, creating a positive feedback loop of "price increase—short covering—further price increase."
According to Coinglass data, in the past hour, long positions reached $5.762 billion, up 52.94%. However, short positions still account for 48% of the market. Morgan Stanley noted that most short positions are concentrated at defensive levels below $115,000. If the price remains steady above $117,000, it could trigger a new round of short covering worth $500 million, further strengthening the upward momentum.