What is a short squeeze + BNB situation ??
A short squeeze is an unusual condition that triggers the rapidly rising price of a token. It occurs when there is a significant number of short sellers, meaning lots of traders are betting on its price falling.
When a heavily shorted token unexpectedly rises in price, the short sellers may have to act to cut their losses, or they will be liquidated. Traders will either buy back the asset manually or be forced to buy it automatically via position liquidation thus will force the price to go up ??
The BNB situation is interesting because the current funding rate on BINANCE is -0.0347%, which means shorts are paying 0.104% of their position value every 24 hours to longs.
The main reasons people are shorting BNB are:
• Recent Binance legal issues
• Hedging long perp positions
• Hedging spot BNB for Binance Launchpad
All of this is creating net short value that, if pushed to liquidation, will fuel the huge price pump.
?? In short, be careful with BNB shorts
