An analyst has tied Bitcoin's latest rally to a major short squeeze. According to him, a wave of liquidated short positions was the main reason behind the sudden price spike.

What Is a Short Squeeze and How Does It Move the Market?

A short squeeze happens when traders betting against an asset are forced to close their shorts as the price climbs. This triggers extra buy pressure, which can send Bitcoin even higher, fast.

How the Market Reacted

As the short squeeze kicked off, a lot of traders scrambled to cut their losses on shorts, which only fueled the rally. The analyst pointed out that these scenarios can cause sharp price swings.

Why Bitcoin Is Climbing

The analyst says the short squeeze is the main driver behind Bitcoin's gains in recent days. He also noted that these moves often come during periods of high volatility and heavy trader activity.