The cryptocurrency market is struggling to recover after witnessing sharp sell-offs. Amidst these sales, analytics platform Santiment draws attention to 2 altcoin projects. Santiment says there is significant FUD behind these 2 tokens. Therefore, he states that this could provide “rocket fuel” to prices.
Santiment: Traders on Binance sold short, these 2 altcoins could skyrocket!
According to data from on-chain analysis platform Santiment, Bitcoin Cash (BCH) and Loopring (LRC) are among the altcoins currently bet against in the futures market. Santiment shared a chart on Binance last month showing the trend in the “funding rate” for these two assets. Additionally, the analytics platform makes the following statement for 2 altcoins:
BitcoinCash and Loopring are among the assets shorted on Binance after crypto markets fell dramatically this week. They are already showing signs of rebounding. Additionally, short liquidations will only act as rocket fuel if markets recover.
The funding rate here refers to the periodic fee that futures contract holders on Binance are currently paying each other. From the chart, it is possible to see that the indicator has been negative for both of these altcoins recently. These values of the metric show that shorts are dominant on the platform. These traders are willing to pay fees to maintain their positions. This naturally means that there is currently a FUD among traders against these 2 altcoin projects.
There is a high probability of a “short squeeze” for BCH and LRC
However, it is possible that such a ‘bear’ mentality may actually benefit prices. Both of these altcoins showed signs of a comeback in the past day. As Santiment noted, if this market recovery continues, shorts will be liquid. This will potentially act as rocket fuel for altcoin prices. Bitcoin Cash in particular currently has significant FUD on Binance. Additionally, as the asset begins to rise, a mass liquidation event called a “short squeeze” may occur.
“Short squeezes” are generally volatile events in which the price moves sharply in one direction. Shorts are more likely to be victims of a “short squeeze” right now. Therefore, BCH is likely to enjoy a sharp rise.
Glassnode: Risk appetite for altcoins is increasing!
Speaking of altcoins, on-chain analysis firm Glassnode covered how different parts of the industry have performed against Bitcoin recently in its latest weekly report.
Glassnode has divided the entire sector into four “indexes”. These are DeFi Index, GameFi Index, Scaling Index and Staking Index. As you can see in the chart above, all the different altcoin indices have gained some ground since the spot Bitcoin ETF approval earlier in the month. This suggests that as BTC sells off on this news, risk appetite for altcoins increases across the industry among market participants.
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