In this bearish cycle, a large number of short sellers have already been squeezed dry. Many are in trouble: even if they add to their positions to average down, if they don't get the average price right, breaking even becomes a luxury.

The key factor is the invisible killer: the funding rate. For example, with a $10,000 short position, when the rate is negative, the daily expenditure alone can be over $500 to $1,000. Over these ten days or so, just the funding costs can amount to $5,000 to $10,000. Even more severe, during those two days when the rate dropped to -2%, the costs skyrocketed.

Although negative funding rates are still quite high now, the problem is—if you add to your position and the entry point isn't precise, your margin might not hold up to the critical 16 level, and liquidation could be imminent. It's not that you can't make money, but in this game, time and funding rates are mercilessly eroding your principal.