Most cryptocurrencies have suffered huge losses over the past two weeks amid a shift in sentiment from greed to fear. The current bearish trend has benefited crypto short sellers. Now they may be subjected to a possible ‘short squeeze’. Crypto analyst Vinicius Barbosa draws attention to 2 cryptocurrencies with high ‘short squeeeze’ potential, according to CoinGlass data.
Cryptocurrency market lost blood, shorts increased!
In the second week following the Bitcoin spot ETF approval, Bitcoin (BTC) fell below $40,000. cryptokoin.comAs you follow from , the cryptocurrency market also followed the leader. Thus, the market has lost over $325 billion in value since its peak on January 11. This move in particular attracted bearish traders and there was an increase in short positions for multiple cryptocurrencies in the market. Therefore, crypto exchanges are recording upward accumulated liquidity, which can trigger short selling events at any time. ‘Short squeeeze’ occurs when trading positions are closed or liquidated when the crypto reaches liquidation prices. This further catapults the price into the liquidity pool.
The leading cryptocurrency is the best candidate for ‘short squeeeze’!
Bitcoin in particular is still the most likely candidate for a ‘short squeeeze’ this week. This is because BTC has the highest volume and liquidity. Additionally, Bitcoin has created attractive price targets for professional market makers and whales. On CoinGlass’s weekly heat map, it is possible to see over $3 billion waiting for liquidity between $42,000 and $43,400. Meanwhile, Bitcoin’s price was at $38,900 at the time of writing. A jump to these levels would mean an increase of approximately 11% for Bitcoin.
Ethereum (ETH) could surge above $2,500
Meanwhile, the second-largest cryptocurrency by market cap is also among the top candidates for this week’s ‘short squeeeze’. A rise in Ethereum (ETH) from its current price of $2,200 to intense liquidity at $2,500 is possible. This means a 13% jump for the leading altcoin.
However, it is important to understand that high liquidity pools do not guarantee a short selling event. ‘Short squeeeze’ requires a move that will trigger the first short liquidations in cryptocurrencies. This means that tokens must face increasing demand for the first price increase. For this, crypto market sentiment must rise. However, this is still unclear. It is possible that prices will continue to consolidate for some time during these declines. In fact, further declines are possible. For this reason, it would be beneficial for investors to be cautious.
The opinions and predictions in the article belong to the analyst and are definitely not investment advice. We recommend that you do your own research when investing.
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