What is a short squeeze - $684 million in forced liquidations triggered by a sharp rebound in the crypto market

MissedAirdropBro · 2026-02-16T19:13:51+00:00

The essay discusses the phenomenon of "short squeeze" in the crypto market, highlighting a recent event where $684 million in forced liquidations occurred, primarily affecting short positions. This demonstrates the powerful mechanics of market volatility and underscores the importance of cautious position management among traders.

MissedAirdropBro

2026-02-16 19:13:51

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When the cryptocurrency market experiences a significant rebound, a phenomenon known as a “short squeeze” can occur. A short squeeze, in simple terms, is when traders holding short positions are collectively forced to liquidate due to an unexpected market rise. The recent market rebound vividly demonstrated this mechanism.

Large-Scale Forced Liquidations Triggered by Market Rebound

In the past 24 hours of trading, a total of $684 million in forced liquidations were recorded across the entire market. Notably, short position holders faced considerable difficulties. Forced liquidations of short positions amounted to $577 million, accounting for over 84% of the total market liquidations.

This scale of forced liquidation event is the largest since the market correction on November 11, and it has garnered significant attention among market participants.

What Is a Short Squeeze? - The Mechanics of Short Liquidation

A short squeeze occurs when traders holding short positions, aiming to profit from a decline, are forced to cut losses due to an unexpected rapid rebound. This process triggers a chain reaction of stop-loss sales, leading to further price increases and creating a vicious cycle.

The $684 million in forced liquidations this time clearly demonstrates how powerful this mechanism can be and highlights the high volatility of the market. Traders must always be aware of the risk factors associated with short squeezes and manage their positions more cautiously.

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