it makes a world of difference.
when the market is majorly short then moves up (causing would be sellers to pull asks) shorts are a powerful bullish force---big demand meets small supply. on the other hand when it moves down, technical selling pressure (outside of leveraged markets) dampens that effect.
Shorts don't appear out of nowhere
As a shorter, you have to buy back absolutely the same amount that you have sold earlier. So it is essentially a "zero-sum game" as far as the net effect is concerned.
that's only true in a vacuum, regarding each individual position. your point is irrelevant when you consider underlying supply and demand, since net shorts depend on existing sell liquidity to buy back
I'm not sure I'm able to decipher the meaning here
there is a big difference between 20k BTC worth of shorts trapped in a losing position and zero shorts trapped in a losing position. in the former case, shorts will be forced to close (whether due to pain or margin requirements) into thin ask liquidity, strongly driving prices up. in the latter case, there is no effect on price
It doesn't matter as far as "betting against Bitcoin" is concerned
Whether you are forced to buy or buy of your own accord only, you are betting in favor of Bitcoin. When you sell, either your own coins or borrowed ones, you are betting against Bitcoin. If you want to say that the same amount can produce a different effect, once sold on margin and then bought back, that may well be the case. But in general you don't know its direction and scale in advance, and thus can't say beforehand whether the net effect of short sells followed by buybacks is against or in favor of Bitcoin growth. All in all, it is a moot point, and can thus be safely discarded
And to hammer the final nail into the coffin of this logic, let me remind you that you can not only sell bitcoins on margin but also buy them with borrowed dollars, and then still end up forced to
sell back when the price goes against you. So no matter how obscure and convoluted your reasons might be, they are instantly mirrored and negated by the same reasoning applied to the opposite pair of trades. And while we are at it, long squeezes seem to wreak more chaos in the markets, and instill greater fear in traders. I have yet to see a short squeeze of 50% with Bitcoin, given the current price levels