This week started with the $4,000 Bitcoin (BTC) rally. BTC gained 10% from the lowest price to the highest price on January 8. Some cryptocurrencies followed the lead, overperforming the cryptocurrency market, increasing its capitalization dominance to over 54%. However, some are left behind in this bull rally. These are still dominated by short positions and the remaining liquidity is upward. According to crypto analyst Vinicius Barbosa, these high-priced liquidity pools could become the target of market makers. The analyst shares 2 altcoins with high ‘short squeeze’ potential.
Will XRP skyrocket with short liquidations?
Essentially, a ‘short squeeze’ occurs when short positions are heavily liquidated. These liquidations force purchases of the cryptocurrency in question, increasing the price. It also brings new liquidations for even higher prices in a spiral event. CoinGlass data shows Ripple (XRP) and BNB Chain (BNB) as 2 altcoins with this potential.
Notably, XRP’s liquidation heat map shows three high liquidity pools in the 3-day time frame. These are $0.583, $0.590 and $0.592. The heat map supports the possibility of a ‘short squeeze’ at these prices.
However, these are relatively low liquidity pools with no more than $1,560 each. That’s why it’s important to keep the situation in mind. This is due to significantly low XRP volume in the derivatives market, which has worsened further and dropped 45% in the last 24 hours. XRP was trading at $0.569 at the time of writing. Additionally, only $577.09 million worth of short positions were opened in the last 24 hours. Meanwhile, the total daily volume for the altcoin is $1.04 billion. Short sellers dominate 51.82% of the short-term interest.
There is also a possibility of a ‘short squeeze’ for altcoin BNB
Meanwhile, BNB Chain’s native token is heavily shorted with attractive liquidity pools to the upside. There are three main short price targets of $311.9, $312.4, and $313.3, each with more than $1 million in liquidity.
Interestingly, BNB is more likely to see a ‘short squeeze’ than XRP. Because its current liquidity is higher than XRP. The altcoin was trading at $304.97 at the time of writing. However, the 24-hour volume is lower compared to XRP. There is a short position of $367.36 million in BNB opened during the day. Additionally, these positions account for 50.36% of the $705.9 million volume.
However, low volume for both altcoins means that this scenario could easily change at any time. If there is significant volume for long positions in the cryptocurrency market, liquidity can support liquidations and stop hunting by the bulls, pushing the price down.
The opinions and predictions in the article belong to the analyst and are definitely not investment advice. cryptokoin.com We strongly recommend that you do your own research before investing.
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