So what does this mean? Once people start paying back the loans there will be an cascade of sells = downward pressure on the market?
That would be a long squeeze. In a short squeeze there are cascading
buys of the asset (BTC) and the loans closing are in BTC, not USD.
The reason is arbitrary, but of course is in effect a rising price. That forces shorts to close in a cascading effect.
DEFINITION OF 'SHORT SQUEEZE'
A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock. A short squeeze implies that short sellers are being squeezed out of their short positions, usually at a loss. A short squeeze is generally triggered by a positive development that suggests the stock may be embarking on a turnaround.
Now, of course many shorts will close voluntarily
before they are forced (we already saw this to an extent).
If no short was forced to close and yet many shorts closed voluntarily during a juicy rally, would we still call it a short squeeze? I'm not sure.
