The cryptocurrency market is retreating after a significant rally on January 2. This latest surge has led to short selling events in leading cryptocurrencies. Thus, it liquidated thousands of crypto short sellers. Essentially, a ‘short squeeze’ occurs when short positions are liquidated in a major down market. These liquidations force purchases of the cryptocurrency in question, driving up the price. Even new liquidations bring even higher prices and a spiral event. In this context, crypto expert Vinicius Barbosa looks at two altcoin projects with high ‘short squeeze’ potential.
Short selling warning for Altcoin Polygon (MATIC)
Notably, Polygon (MATIC) shows a weight of 52.92% with $741.80 million in open short positions at the time of writing. Additionally, the 24-hour volume increase was 82.26% amidst a price decline of close to 13.97%. MATIC was trading at $0.87 at the time of writing.
Notably, this has been a constant for the altcoin, creating massive upward liquidity. It is possible to see liquidation worth thousands of dollars in a three-day period. In case of a ‘short squeeze’, MATIC could rise as high as $1.05 after reaching the major target of $1.035.
Will Cardano (ADA) skyrocket with a short selling event?
Cardano (ADA) was another heavily shorted altcoin with $622.82 million (53.68%) shorted on January 3. Its native token, ADA, was trading at $0.54 as of press time. Additionally, ADA lost 13.24% in value in the last 24 hours. Just like Polygon, Cardano has experienced an increase in the volume of its derivatives. Interestingly, this observed volatility increases the likelihood of a short selling event occurring at any time.
Additionally, Cardano’s liquidation heat map also shows large upward liquidity points. Market makers use these liquidity pools as price targets to increase their profits when liquidating traders. For ADA, a ‘short squeeze’ could see it jump to $0.65 after short sellers liquidate at $0.63 and $0.64.
Meanwhile, there is no guarantee that such an event will occur for these 2 altcoins. It is important for cryptocurrency investors and speculators to do their own research. They also need to consider multiple pieces of data to make profitable financial decisions.
The opinions and predictions in the article belong to the expert and are definitely not investment advice. cryptokoin.com We strongly recommend that you do your own research before investing.
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