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What Is a Short Squeeze?
When shorts panic and drive prices higher
A short squeeze happens when a heavily-shorted stock rises, forcing short sellers to buy back shares to cover their losses — which drives the price even higher, triggering more covering. GameStop in January 2021 is the most famous example: retail traders on Reddit drove shares from $20 to $483, obliterating hedge fund short positions worth billions.
Quick check
What triggers the buying pressure in a short squeeze?