You know, when I first started understanding crypto, I couldn’t quite grasp what a squeeze actually was. But then I saw a few of these events live, and everything became clear.

A squeeze is essentially a chain reaction in the market. Imagine: a bunch of traders open shorts, confident that the price will fall. Then suddenly, the price starts rising unexpectedly, maybe due to news or large purchases. And these guys with shorts end up in the red. The higher the price goes, the more painful their positions become. Brokers start forcibly liquidating shorts, traders are forced to buy back the asset, which pushes the price even higher. That’s what a squeeze is in action — an explosive rise that seems endless.

I remember everyone discussing GME in 2021. Retail investors started buying up shares en masse, and a huge number of short positions were open. The price skyrocketed from $20 to $483 in just a few days. This is a classic example of how a squeeze can completely turn the market upside down.

In crypto, these events happen regularly, especially during volatile periods. Bitcoin and altcoins often become targets of squeezes because of high leverage and rapid movements. Currently, by the way, BTC is trading around $79.69K with a +1.69% increase over the day, ETH at $2.36K (+2.30%), BNB at $628.10 (+1.88%). Interesting levels.

If you want to avoid getting caught in such a trap or, on the contrary, catch the wave, watch the percentage of open shorts. If it’s sky-high, that could be a signal. Also pay attention to liquidations in the futures market — if there’s a sudden spike, it might trigger exactly what I’m talking about. A sharp increase in volume during an upward move also often precedes a squeeze.

A squeeze is a phenomenon you need to understand, but don’t chase after it. It’s better to just know the mechanics and analyze the market soberly.