This is pretty rational behavior.

The short sellers are paying (a lot of) interest on their positions and they need those shares. The higher the price goes, the higher the interest rates get.

People long $GME can maintain their positions indefinitely while the short sellers bleed.

This situation could have been prevented if the short sellers acquired enough calls to cover their position in the event of a price spike. One would think that a rich-ass hedge fund manager would do something basic like that.