Cryptocurrency traders often navigate price trends, launching into short positions during bearish phases and long positions amid bull rallies. This behavior sets the stage for profitable long or short squeezes, masterminded by whales and market makers.
When initiating short positions, traders essentially bet on the cryptocurrency‘s value dropping through a collateral deposit and a liquidation price above the current exchange rate.
However, if the asset’s price surges, reaching this liquidation point, it can forcibly close the traders’ positions. This event, known as a short squeeze, involves a cascade of closures, pushing the price higher and clearing the liquidity pools.
Short squeeze alert for Solana (SOL)
Notably, Solana (SOL) has seen an increase in short positions in the last 24 hours, creating upward liquidity pools. Finbold retrieved this data from CoinGlass’ derivatives market on February 20. From the $6.13 billion 24-hour volume, 52.92% is made by short sellers, for $3
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