Recent events in the cryptocurrency market have completely changed sentiment from neutral to bullish. The SEC has finally approved spot Bitcoin ETFs, sparking a bull rally for most cryptocurrencies. In this event, traders closed millions of dollars worth of short positions, reducing the possibility of a ‘short squeeze’. However, according to crypto analyst Vinicius Barbosa, it is still possible to find small pools of liquidity in the market. The analyst draws attention to 2 altcoin projects that have the potential to skyrocket.
There is a ‘short squeeze’ possibility for Dogecoin (DOGE)!
By opening short positions, traders create upside liquidity pools due to stop loss and predefined margin-call prices. Essentially, if the cryptocurrency reaches these prices, positions are closed or liquidated. With more liquidity pools, the price rises rapidly. This is called ‘short squeeze’ in financial markets. Dogecoin (DOGE) and BNB Chain (BNB), in particular, still have some liquidity at higher price levels despite their lower volumes. Data from CoinGlass on January 11 confirms this for 2 altcoins.
As of press time, Dogecoin was trading at $0.087, up 12% in the last 24 hours. However, DOGE recorded a 32% volume loss of $1.33 billion in derivatives transactions. Of this, $703.37 million (51.18%) consists of recently opened short positions.
As the heat map below shows, these short sellers can contribute to higher liquidity pools. Notably, the weekly liquidation chart shows a concentration above $0.086. Moreover, DOGE has already started to liquidate some positions as the altcoin approaches this price range.
BNB has already been short sold! Is there more for the altcoin?
Meanwhile, BNB has already proven the effectiveness of liquidity pool analysis. Previously, we issued a short selling alert for the altcoin on January 9. This happened in line with expectations. Currently, BNB is trading at $315 with both upside and downside liquidity.
As a result, low volume for the two altcoins is likely to prevent a ‘short squeeze’ from occurring. Even then, it’s possible for prices to continue rising if the market maintains its bullish momentum.
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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