Steemit Crypto Academy Contest / S13W4 - Short Squeeze
Once again I am really glad making my entry for this lovely contest and I really want to thank the team for their good job and their assistance. I hope you enjoy and get educated as you go through.
A short squeeze is an unique action in the stock or crypto market that shows a fast trigger in the rising of prices in a stock asset or crypto assets. Short squeeze happens when a asset has a very low amount of seller, leading to a higher or larger amount of buyer or buy pressure for an asset.
A short squeeze is a market predicting technique that is seen when the price of a asset experience an amazing upward trend liquidating seller of the asset who have placed a sell positions on the asset. Short Squeeze is similar to Short selling theory. Short selling has to do with the borrowing shares in an asset or stock and then selling asset with the hopes that the asset value would reduce so the can cheaply buy back the asset. So therefore returning returning the asset and taking the profit in difference as their benefits .
A short squeeze happens whenever the price of an asset starts moving bullish instead of going bearish. As the price move, it goes fast and rapidly causing the market to be volatile than before. This would also cause seller to immediately want to buy and keep the asset causing higher demand than expected.
Before I would change the topic short squeeze can be triggered by different things like technical News about the asset, or news of new investors on the market for example recently Binace and Bybit announcement concerning them listing Steem in their future market caused steem to move bullish .
Also within today ORDI/USDT went bullish, this bullish movement started since Binance also added the asset into its future, even today a short squeeze can still be detected on the pair after it recent boom.
Short squeezes can lead to cause the market grow higher volatility, and so therefore cause so many short order lose their asset without a warning. Short Squeeze is lovely to those who understands how to use it to make profit while it is hated by those who lose capital by getting liquidated.
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There are so many cases of short squeeze in the crypto market but I will talk about BNB/USDT and TRX/USDT after it recent short squeeze experience after which there was a powerful bullish run.
In the BNB/USDT crypto market
I have marked it with a reddish box that the market BNB price moved bearish because there were more Short traders but after a short squeeze the market started moving bullish after a short period of time, so therefore meaning there's more buyers in the market.
All the Short traders were getting liquidated so therefore they seller started buying to recover from their sudden loss, the turn-around caused a large turn around in the market causing the market go bullish or go upward with so much green candlesticks. As we can see the price moved from around $221.00 to $251.6 and currently it's $255.00 per BNB/USDT, this is a really big pump just in few weeks. Imagine mastering this technique, how much money would you be making?
Similar movement was seen in TRX/USDT in recent week
Similarly I have highlighted the short squeeze with it with a reddish box that the TRX/USDT market price moved bearish because there were more Short traders but after a short squeeze an update the market started moving bullish after a short period of time, so therefore causing more buyers in the market.
All the Short traders were getting liquidated so therefore they seller started buying to regain their sudden lose, the turn around caused a large turn around in the market causing the market go bullish or go upward with so much green candlesticks. As we can see the price moved from around $0.09808 to $0.11000 and per TRX/USDT, this is a really big pump just in few weeks. As I have said Imagine knowing this technique, how much profit would you be made?
A short squeeze is formed by a different influencial of factors that can force or trigger traders to make a forceful turn around or change in decision where crypto traders, forex traders or stock traders who have are sellers all of a sudden turns to buyer because of a powerful bullish force. The traders do this action to make more profit and reduce loss of asset or stock, most cases its done to quickly recover from the loss of asset or crypto.
In the shortest day ever the way short squeeze are formed I usually when there is a sudden rise or uptrend on the particular asset crypto of stock and traders will shortz position start losing their assets, this traders tend to close their short positions on the asset and Dead trigger my position in order to generate some profit or recover their loss why the trends continue.
As i had said the are different forms or way short squeeze can be triggered, there are as stated below 👇.
• Upgrade in Blockchain:
Something when there is a new development on a Blockchain this can trigger it's native asset to go bullish with a great momentum, this act can cause a short squeeze . For example when Ethereum changed it consensus mechanism, there was a pump which increase Ethereum price at that period of time, when the price increase traders can just stop their sell position to avoid liquidating their account and perform a turn around by becoming buyers of Ethereum native asset.
• Short Selling:
Earlier this post i said about the term short selling, should selling in simplest tterm can be defined as the act of borrowings crypto asset or shares of an asset and making away with all the profit after using the borrowed asset to sell and buy at the appropriate time, this borrowed as will the be returned in the desired goal is met.
• Market News: A short squeeze occurs after any legit bullish news, crypto news can be seen in different sites like cryptocraft.com, cryptotelegraph, cryptodesk, Bitcoin Magazine and many more site's. There are different types of crypto news that affect the market but new listing into an exchange and CPI News are really powerful and could trigger a short squeeze. They used to be a saying that information is power and in crypto information is really powerful.
• New Whale Investors
Yea when there are new investors or partnership on a Blockchain, most especially if the new investors or famous and we'll trusted, I can vividly remember when hungry-griffin showed up on steemit. There was a massive bullish pump on steemit and that caused a lot of traders to trigger a short squeeze to make more profitable funds or asset.
• Act of recovery: In a normal day, there are many buyers and sellers but when there is a sudden rise like this the sellers lose alot of money, this trader then try to at least recover their lost. This causes the short trader to become buyers in order to at least recover some or all their previous loss because of the sudden bullish movement.
Definitely everything that has advantages also have a it's own disadvantage, even Short Squeeze have it's advantages and disadvantages.
:
° Large Profits For Buyer before the
Short Squeeze:
If the short traders who triggered short positions could make some profit or recover their loss, then imagine how much profit those who have been on long or buy position. This traders tends to make massive profit than the short trader would ever make on that, and they tend to profit from the massive pump .
° Asset Efficiency:
Short squeezes can help influence an asset efficiency by helping the asset to grow in value faster and stronger, also it would help increase the popularity and more holders cause the project to meet it desired goal in no distance time. for example the short that happened on Core earlier this year made the asset gain a strong ground on the crypto ecosystem.
° Increased Volatility:
I must I have met traders who so much love to invest on the most volatile asset because the could be very profitable when the want to and as we all know short squeeze increase the Volatility of an asset an the crypto market. For example if a short squeeze cause Bitcoin to be very volatile, most altcoins and meme coins becomes very volatile and the whole market begins to look volatile.
° Increased Investors
When an asset goes bullish there are usually a lot of investors rushing to invest and join in the growth of the project, for example as Steem price started pumping a lot of traders, investors and old steemians became active on steemit just to hold more steem asset. This happens because when an asset goes upward, there is hope it would still keep pumping and generating income.
✓ Losses for Short Sellers: As I have said Short Squeeze cause trader who were on short positions for the asset to get liquidated or loose their asset, infact this is the concept behind short squeeze. This losses are what triggers the sellers become buyers, so therefore reducing the quality of sellers in the market, so it's usually advised this loss can be recovered by becoming buyers before the uptrend ends. If you enter late you might still not recover but loose your asset if you buy the high high of the buy candlesticks
√ Market Volatility: Despite the fact that Short squeezes can cause volatility that could be profitable, short squeeze can also cause volatility that could generate loss and crashing of smaller and weaker asset. This is because after a long bullish run there are usually bearish short following it because the holder have made enough profit and feel like selling their asset.
√ Might Cause an Over-Valuation: Short squeezes may temporarily increase the value of the crypto asset beyond its supposed or fixed value, therefore cause they market flutrate or become instable . Therefore causing the overvaluing of an asset, this change might take a long period or short period and it could cause holder large lose if the price reduce to it original price.
At this stage I hope and believe we all have understood about short squeeze, it's cause, it's advantages and it's disadvantages, so therefore I will move to the last topic. This post won't bcomplete without talking about short squeeze on steam moreover short squeeze I occurred recently on Steemit native asset known as "STEEM".
As I have said before crypto news an update concerning an asset can really trigger short squeeze and a powerful bullish run in the crypto market, recently Bybit made the announcement by adding steem as assets that could be used for future trade on their exchanges. Weeks later other exchanges also added steem to it future trade platform.
Just recently Binance followed the trend by also adding steem as part of asset that could be traded on it future platform, this latest development caused a massive bullish trend and also caused a short squeeze scenario on steem market.
Before binance listed steem to his future trading platform a famous and very influential steemian @xpilar also said something similar in a comment under a trending post by Steem blog, all this news an update cause the pressure that pushed steem really high this past days.
Short Squeeze can be very important to some traders and at the same time it could be very disastrous to other trailers who fall victim by using their currency or assets due to the sudden uptrend or bullish movement on an asset. Thanks for going through remember starrchris cares ❤️
I am inviting @slon21veka @chetanpadliya @hamzayousafzai @jasminemary
You have probably spent several hours writing about "Short Squeeze"
Well written, hope many will read your post and vote for you
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Very well written detailed article about short squeeze. I found the points you mention in the advantage and disadvantage section interesting. Keep posting and good luck!
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Hi @starrchris
A trader makes a trade and the trade sometimes takes a lot of profit which drives the trade up and there comes a time when the crypto stops pumping but always goes down. Which is a lot of losses but the buyer always thinks of the bottom which the buyer wants to buy because when he buys on the bottom when things pump up then the trader will have a lot of upside. has chosen the best post every time I read your post I always learn something from it and I pray that you always continue to climb the ladder of progress.
Hello brother.
You have really explained every concept in detail which makes it really quality content. You have given good examples to explain about it.
And Yes, Sometimes Positive news also result in short squeeze like when Steem Pair listed in future trading of Binance and Mexc, then It also experienced a short squeeze.
I learned lot about short squeeze through your post and also about short selling.
Good friend who always present quality posts, thank you for inviting me to read and learn from your post. As a trader, I don't need to open too many position, or stay long in a trade am not too sure of. Good post, and success to you.