If you still don’t know what a short squeeze is, here’s a brief explanation of this wild market phenomenon. It happens when the price of an asset suddenly shoots up, forcing traders who positioned for a decline to panic and close their positions. The result? The price rises even faster—like an avalanche.

How does it work in practice? First, a large number of short positions build up. Traders are confident the price will fall, so they borrow the asset from their broker and sell it. But then something changes. It could be positive news, a big purchase, or simply market manipulation. The price starts rising, and those who were short see their losses grow.

Next comes the most interesting part. As the price climbs, brokers forcibly close shorts. Traders are forced to buy back the asset at increasingly higher prices to close their positions. This creates massive demand, which pushes the price even higher. It turns into a chain reaction that can lead to parabolic growth. Each liquidated position amplifies the effect.

The most famous example is GameStop in 2021. The stock rose from $20 to $483 in just a few days. Retail investors coordinated and started making mass purchases, and shorts began to be liquidated in waves. The crypto market also often sees moves like this, especially during periods of high volatility.

If you want to catch moments like these, pay attention to a few things. First, monitor the level of short positions. If the percentage of shorts is high, it could be a signal of a potential squeeze. Second, watch for liquidations on the futures market. A surge in liquidations often triggers a chain reaction. Third, pay attention to volume. A sudden increase in volume during an upward move can be the first sign that something serious is starting.

Right now, the situation on the market is interesting. BTC is trading at around $68.14K, up 1.35% over the day, ETH at $2.08K (+0.67%), and BNB is showing $596.00 (+0.52%). The conditions for the move are there.

Remember, this is for informational purposes only and not financial advice. Short squeezes are a powerful phenomenon, but they are unpredictable and dangerous for unprepared traders.