LogFAQs > #965834495

Lopen posted...

I said they're scrambling for liquidity, not scared. To cover a short position you need to buy it. This is a good time to cover short positions.

The problem is everything is down so they don't want to sell their long assets, so they have to pull it from somewhere ie Crypto. Crypto tends to tank a bit before short stocks squeeze, historically. Check GME and AMC run prices and compare to the price of BTC.

Also a lot of the market going down has been a result of short selling, not long selling, so while they're up the actual amount they're up isn't as much as you'd think, and the funds that get out last get punished hard if the market actually recovers.

Covering increases their liquidity. They're trading on portfolio margin anyway. If they move from a net short position to a net neutral position their margin usage goes down.