Dan Sundheim restructured D1 Capital's short book from 8 names to 40 after being caught in the GME squeeze.

His reasoning was the short opportunity is larger than ever because retail is driving flows with emotions rather than fundamentals, and that inefficiency cuts both ways.

The opportunity is bigger, but so is the squeeze risk on any single name. The solution could be spreading the short leg wide enough that no single squeeze ends the trade.

Most crypto traders are still expressing short views through concentrated single-name positions, despite a market that spent the last year squeezing nearly every obvious fade. The view was often right but the expression was wrong.

A 40% squeeze on a single-name short is a 40% hit to the short leg. The same 40% squeeze inside a 20-name basket is a 2% hit. You could hold the same view and take a fraction of the damage.

The result is a basket that runs at lower volatility than the HYPE/SOL pair trade, despite every one of its 20 short legs being individually squeezable. Max drawdown compresses to -15% on the basket versus -48% on naked HYPE.

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