Volume in the cryptocurrency derivatives market is decreasing. Most projects recorded a 50% loss in 24-hour volumes. It is possible that this will reduce the expected daily volatility. However, a keen observer can always spot a short opportunity even in low volume scenarios. Crypto analyst Vinicius Barbosa identified 2 altcoins with high ‘short squeeze’ potential.
‘Short squeeze’ warning for Altcoin Solana (SOL)
It is possible that Solana (SOL), in particular, may soon face a ‘short squeeze’ considering the amount of upward liquidity in the 3-day time frame. Crypto traders have already hunted down previous liquidation pools.
Notably, after a series of smaller liquidity pools, the highest concentration is $111.56. Hitting this price target would represent a 10% upside for the altcoin, which is currently trading at $101. In the last 24 hours, investors opened $3.62 short positions. Thus, it accounted for 51.27% of Solana’s daily derivatives volume. It is quite remarkable that SOL lost 38% of its volume. Because this was higher than the average losses for the cryptocurrency market.
Will Ripple (XRP) jump into short liquidations?
Meanwhile, the XRP token lost 63% of its 24-hour derivative volume. Thus, the altcoin was trading at $0.567 at the time of writing. With daily volume of $1.39 billion, short sellers dominate with $760.57 million (52.05%).
Interestingly, the liquidation heat map shows results for both metrics. Low volume means less liquidity on the map. Short seller dominance weighs available liquidity upwards. This combination supports a ‘short squeeze’ for XRP, although not enough to skyrocket the price. Essentially, a short-term liquidation event could push the altcoin price as high as $0.613, with the most likely hit being $0.602.
Like SOL, XRP traders have liquidated these pools before. This is proof of their relevance. 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 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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