What is a long squeeze, impact on the market

A long squeeze occurs when falling prices force leveraged traders to close their positions, leading to liquidations that increase selling pressure and further drive down prices. This phenomenon can turn an ordinary decline into a sharp drop within minutes. A trader who opens a long leveraged position sets a liquidation price, below which their margin no longer covers the loss. In a bull market, these liquidation prices accumulate at close levels. A sufficient price movement can hit the first group, resulting in forced liquidations that push the price even lower. On June 4, 2026, Bitcoin briefly fell below $62,000, triggering over $1.5 billion in liquidations within 24 hours, with more than 208,000 traders liquidated. Over $800 million was liquidated on Bitcoin and $386 million on Ethereum. This situation arose after days of fragility, marked by nearly $1 billion in net outflows from U.S. Bitcoin spot ETFs. Traders should avoid maximizing their leverage, especially after a period of gains, to protect themselves against potential liquidations.

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