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Short Squeeze
A rapid price rise that forces short sellers to buy back their positions, accelerating the move further.
A short squeeze occurs when a rising price forces traders holding short (betting-on-decline) positions to buy back the asset to close out their positions or avoid liquidation, and that additional buying pressure pushes the price up further.
This can create a rapid, self-reinforcing price spike distinct from a move driven primarily by new buying demand alone.
Examples
- A short squeeze can cause a price to rise sharply and quickly, beyond what typical demand alone would produce.
- Heavily shorted assets are generally considered more susceptible to a short squeeze.