Futures & Derivatives

Short squeeze explained

Squeezing the Shorts

Quick definition: A short squeeze is when a sharp price rise forces Shorts to buy back or get liquidated en masse, pushing the price up even faster.

When too many people are Short, even a small uptick sends many Short positions into their stop losses or liquidation prices. Closing a Short is a buy order, which pushes the price higher still.

Signs that a short squeeze is likely: deeply negative funding, an unusually high Short ratio, and sharply rising OI while the price trades sideways.

On Crypffalo, a short squeeze shows up as a burst of "SHORT liquidated" entries (in green) within a few minutes.

💡 Example

An altcoin's funding is at −0.3%, then the price suddenly jumps 15% in 1 hour with more than $20 million in Short positions liquidated.

📊 View real-time liquidations →

Related terms

Long squeezeA long squeeze is when a sharp price drop triggers cascading Long liquidations, pushing the price even lower.…LiquidationLiquidation happens when a leveraged position has lost almost all of its margin, and the exchange automaticall…Funding rateFunding rate is a periodic fee that Longs and Shorts pay each other on perpetual contracts, keeping the contra…Long/Short RatioThe Long/Short ratio shows, among accounts with open positions, what percentage are Long and what percentage a…

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Educational content for reference only, not financial advice. Leveraged trading carries the risk of losing your entire capital.