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#AERGO This thing seems to be very popular recently. I saw someone say that 5 times people are shorting, and it's still continuing to pump. Why? I'm not looking at the market data, just saying.
The reasoning is simple; the farmers, who are crazy consumers, pump up the prices, causing the shorts to get liquidated. When the shorts are liquidated, they turn into buy orders, and then the farmers distribute at high levels to the buy orders from the liquidated shorts. Additionally, the butterfly effect leads to continuous liquidation of shorts, which is a problem of slippage. For example, a short position at 1 unit liquidates and turns into a buy order.
However, there are no sell orders at the price level of 1, which will lead to the short position needing to be closed at a higher price. This will cause more short positions to be closed.