Cryptocurrency investors generally follow price trends. Investors open short positions when the market is in a downtrend and long positions during bull runs. This creates the perfect scenario for profitable long and short position ‘squeezes’ orchestrated by whales and market makers. Crypto analyst Vinicius Barbosa looks at 2 altcoin projects with high short squeeze potential next week.
There is ‘short squeeze’ potential for these 2 altcoins!
Essentially, when traders open a short position, they are betting that the cryptocurrency will fall by committing to a liquidation price above current levels. If the asset rises instead, it could reach its liquidation price and close out traders’ positions. In particular, short squeeze consists of a series of such liquidations. These force the price upwards, clearing existing liquidity pools and rewarding makers. In this context, the CoinGlass liquidation heat map gives a warning for 2 altcoins.
It is possible that Chainlink and Litecoin will experience a ‘short squeeze’ next week due to increased short positions this week. However, cryptocurrencies are volatile and unpredictable, changing all the time. Therefore, investors need to be cautious. Additionally, it is beneficial to manage risk appropriately when speculating in liquid markets.
Short squeeze warning for Chainlink (LINK)
In particular, Chainlink (LINK) has seen an increase in short positions opened in the last 24 hours. Thus, it created upstream liquidity pools. The most likely target is $20.60 per LINK, at which price $595,560 worth was liquidated. Additionally, reaching this pool could fuel a pump seeking further liquidation above the $21 zone. Chainlink is now trading just under $20. Therefore, for a ‘short squeeze’ it is close to these targets.
Litecoin is likely to pump with a ‘short squeeze’!
Another altcoin with ‘short squeeze’ potential in the near future is Litecoin (LTC), which has increasing short position volume. Similar to LINK, the most relevant liquidity pool is close to Litecoin’s current prices. LTC is trading at $70.60. More than $1 million was liquidated for the token at various prices from $71 to $72. Litecoin could seek higher grounds at $74 in the event of a short squeeze for around 5% gains.
However, investors can avoid liquidation by closing their positions or adding more collateral to already open contracts. Therefore, liquidity pools change dynamically over time as the market adapts to new information.
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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