TIA, the token of data-availability blockchain network Celestia, posted its best monthly gain this year, outperforming the broader market by a significant margin and confounding traders who’d positioned for a drop in the price as the result of a $1.13 billion token unlock due next month.

The market-beating 40% surge, the biggest since December 2023, contrasts with a 13% gain in the CoinDesk 20 Index, a measure of the largest, most liquid cryptocurrencies. It takes place against a background of some market participants seeking downside hedges due to concerns the massive token unlock due Oct. 31 will flood the market and depress prices.

Next month’s unlock will release 175.74 million TIA. That’s 16% of the cryptocurrency’s total supply and worth $1.13 billion, or 82% of the market capitalization, according to data source CryptoRank. Such large unlocks often create bearish pressures in the market.

“There has been an uptick in TIA hedging demand ahead of the Oct. 31 unlock – both via exchange-traded perpetuals, alongside OTC forward agreements with market makers/trading desks,” Jake Ostovskis, an over-the-counter trader at Wintermute, told CoinDesk in a Telegram chat.

The bias for shorts, likely stemming from the hedging activity, might have led to a “short squeeze,” contributing to the TIA rally. A short squeeze happens when the asset price remains resilient, contrary to expectations, forcing bears to close their positions, which are bets that an asset will drop. That, in turn, puts upward pressure on prices.

“Traders tried to sell ahead of the [unlock] event from Julyish. I’d argue the squeeze has already happened,” Ostovskis said.

That’s evident from the recovery in funding rates tied to TIA perpetuals, which have rebounded to nearly zero, or neutral, having been in negative territory since July. As suggested by Ostovskis, rates below zero are a sign of traders taking bearish bets to protect against the downside price risk posed by the influx of so many tokens.

The recovery to neutral alongside the TIA price rally suggests shorts have been crowded out and might have inadvertently squeezed the price higher.

A $100 million fundraise announced this week likely gave bears another solid reason to exit shorts, adding upward momentum. The fresh round raised the foundation’s cash stash to $155 million, although the team did not detail how it plans to use the funds.

Some pseudonymous observers have suggested the fundraising was an OTC deal at a $3.4 billion valuation directly with the foundation, with the token sale priced at $3 and one-third of the same to be unlocked on Oct. 31.

According to Ostovskis, the impending unlock may have been priced in.

“Some commentators have seen their OTC sale sales as controversial, however, the result that a large cliff has been removed and enabling the pre-hedging unlocks has overall been positive, allowing the market to price in this event in advance,” Ostovskis noted.