As you say, futures don't affect supply and demand because they're about belief. Predictions for the future.

Shorting specifically, is about predicting crashes, and getting rewarded for being correct.

Indeed, insurance is precisely what shorting is. But you can think of insurance as a bet too.

How many people right now predict bitcoin will crash? Plenty, right?

Won't they want to make a profit by shorting bitcoin, and getting rewarded handsomely if their prediction turns out correct. Cause so far, without shorts, they can't turn a profit no matter how correct they are.

And that lack of shorts, I believe, has affected the market, specifically, the market's ability to retain a rational value of the worth of bitcoin, because the market basically can't listen to any people predicting crashes.