Liquidation Cascade vs Short Squeeze

A self-reinforcing sequence of forced position closures in which one tier of liquidations drives price movement that triggers the next tier; the mechanism behind crypto's most extreme price crashes; most severe when open interest is high and leverage concentration is elevated.

A rapid price advance driven by the forced closing of short positions; rising price liquidates or prompts voluntary closing of short positions, both of which require buying that accelerates the advance; most likely when short positioning is crowded and large liquidation clusters exist above current price.