In an astonishing turn of events, the ALPACA token from Alpaca Finance just became the center of one of the wildest short squeezes in recent crypto history. After Binance announced it would delist ALPACA, a move that usually sends a token’s price into a tailspin, traders rushed to short the token, convinced it would crash. Instead, the opposite happened: ALPACA’s price skyrocketed by an unbelievable 1,900% from its post-delist bottom, with some trading pairs showing even higher gains. In just 24 hours, the token saw $2.5 billion in trading volume despite having a market cap of only $5 million, and the total value of liquidated short positions hit a staggering $45 million, more than Bitcoin and Ethereum combined during the same period.
The squeeze was set off when whales and savvy market makers noticed how crowded the short trade had become. With so many traders betting against ALPACA and the token’s liquidity drying up after the delisting news, it didn’t take much buying to start pushing the price higher. As the price rose, short sellers were forced to buy back their positions to avoid even bigger losses, which only drove the price up further in a classic feedback loop. The pain for short sellers was made worse by negative funding rates, which meant they were paying extra just to keep their losing bets open. The largest single liquidation reached nearly $4 million, showing just how brutal the squeeze was.
Several factors made this event so extreme. ALPACA’s low market cap meant even small amounts of buying could move the price dramatically, while the massive open interest in leveraged positions left the door wide open for a squeeze. At the same time, the project’s ongoing buyback and burn program reduced the available supply even further, and the speculative frenzy brought in a flood of retail traders and bots, all chasing the action. Even after the rally, funding rates stayed negative, suggesting that many traders still haven’t learned their lesson and are betting on another crash, setting the stage for more wild swings ahead.
The ALPACA short squeeze is a perfect example of how quickly things can spiral out of control in the crypto world, especially when leverage, low liquidity, and herd mentality collide. It’s a stark reminder to traders that, in markets like these, the most obvious trade can sometimes be the most dangerous.
