What Really Happens During a Short Squeeze? A Simple Story You Must Know
In the crypto market, billions move quietly behind the charts — and one of the most powerful forces is the short squeeze.
Here’s the story. . .
---
What is a Short Squeeze?
When too many traders open short positions, the market becomes unstable.
Billions of dollars in shorts create liquidity pools at higher price levels.
If the price suddenly moves upward:
1. Short traders get liquidated
2. They are forced to buy back
3. Their buying power pushes price up
4. More shorts get liquidated
5. Price jumps even higher
This domino effect is called a short squeeze — a violent move designed to destroy short positions and reward early buyers.
---
Who Triggers These Moves? Market Makers.
Market makers (like Jump Trading, Wintermute, big funds, etc.) monitor:
Liquidation maps
Liquidity pools
Stop-loss clusters
Over-leveraged short positions
When billions of shorts are sitting at the same level, market makers often push price into that zone to capture liquidity.
It’s not manipulation — it’s the natural behavior of the market.
---
Why Should Traders Care?
Because a short squeeze can:
-Pump the price aggressively
-Liquidate unprotected short traders
-Give massive profits to spot buyers
-Shift the market structure in minutes
Understanding liquidity maps helps you avoid being trapped… and lets you ride the wave instead
