A melt-up is a rally that feeds on itself: late buyers, short covering, and the fear of being left behind. Volatility often rises with price, which is unusual, and the advance can be far larger and longer than valuation-based reasoning suggests.
Melt-ups are dangerous in both directions. Shorting one because it is unjustified ignores that the flows are real, and joining it late means buying an extended position with no reference level below. The end is often a blow-off-top, which is only identifiable afterwards.
Related: blow-off-top, euphoria, short-squeeze, fomo