A short squeeze occurs when a heavily shorted asset, like a cryptocurrency, rapidly increases in price. Short sellers borrow coins and sell them, hoping to buy back at a lower price for profit. However, if the price rises instead, they face potential losses.As prices climb, short sellers are forced to buy back the assets to cover their positions, which adds more buying pressure and drives the price even higher. This cycle can lead to a rapid and significant price spike, catching many short sellers off guard.Short squeezes often happen in volatile markets, where price movements can be swift and dramatic. Traders may leverage this phenomenon, buying the asset to capitalize on the rising prices. The resulting volatility can attract more investors, further escalating the situation. While some traders make substantial profits during a short squeeze, others can incur significant losses, highlighting the risks involved in shorting assets.