Long/Short Ratio vs Short Squeeze

The proportion of accounts or positions on the long side versus the short side of a derivatives market; extreme readings are contrarian signals — very high ratios indicate crowded longs; very low ratios indicate crowded shorts; most actionable when confirmed by funding rate direction.

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.