"Selling on this level is done by instos, like it or not they...

"Selling on this level is done by instos, like it or not they are generally right,..."

You echo my slightly whimsical comment that short sellers are smarter than the average bear.
Or perhaps more accurately, the average short seller will be better informed than the average long, because, apart from anything else, the pool of longs includes mindless passive investments, such as index funds.
There are no passive short sellers,.
They engage in it because they think they know something that the market doesn't appreciate.

Although the short interest percentage in NST is high at 7.93% (as of 2 Feb) and maybe going higher judging by the 0.5% short sales on 5 Feb, the shorters are not actually stretching their appendage all that far across the block.
The days-to-cover for NST based on the last 20 days average volume is only 6.5 days, and that's after excluding last Wednesday's extraordinary 46m volume from consideration. (Including that day's volume, the DTC is 5.4 days.)
So, the shorter's can vacate their positions fairly rapidly if it turns out that they are wrong.
My rough rule is that 10 days-to-cover is a reasonable threshold measure for worrisome high conviction shorting.

Like you, I have wondered if there is a benign explanation for this shorting, somehow connected to the merger, but it's hard to come up with a convincing one.
But equally, shorting NST at this price level looks exceedingly bold and courageous.

With respect to the GDXJ, as of 5 Feb, the Van Eck GDXJ is still showing that it is holding 46.9 million NST, which gives it a weighting in the fund of 7.73% which closely matches the MVIS GDXJ index weighting for NST of 7.65%.
So, basically nothing much has changed on that front, other than the mechanical adjustments in the index and the ETF to allow for NST having swallowing SAR.
The likelihood that NST will be removed from the GDXJ index necessitating a sell down from the GDXJ ETF is surely a known known, and therefor not likely to explain all the shorting?

Cheers