Most cryptocurrencies have recently experienced a short squeeze following a bullish sentiment shift in the cryptocurrency market. Previously, Finbold correctly identified and reported some of these opportunities with projects like Bitcoin (BTC) and Curve (CRV).
A short squeeze happens when bearish cryptocurrency traders dominate the market, opening short positions and creating upwards high liquidity. The price soars as these positions are liquidated, triggering more liquidations in an upward cascade.
Notably, not many digital assets are left with potential liquidity to go through a short squeeze this week. In this context, we identified Filecoin (FIL) as the most relevant laggard with meaningful liquidations to the upside.
Moreover, Dogecoin (DOGE) features as the most likely short-squeezable cryptocurrency in a higher time frame. However, it is important to understand that the higher the time frame, the easier this scenario can change over time.
Short squeeze alert for Filecoin (FIL) this week
First, Filecoin is the only cryptocurrency left with meaningful short position’s open interest, according to CoinGlass’ 3-day and weekly heatmaps. Reaching these liquidations could drive FIL to as high as $5.5 this week. Thus accruing nearly 4% gains from the current price of $5.29.
Dogecoin (DOGE) short squeeze alert in higher time frames
Next, Dogecoin has accumulated enough open interest in short positions to experience a short squeeze in February. In particular, this concentrated liquidity pool targets $0.0948 per coin in the monthly time frame.
This would mean a 17% surge for the leading meme coin, punishing DOGE’s short sellers. Nevertheless, Dogecoin’s lower time frames register some fresh liquidity to the downside from long-position traders, which could face liquidation before a pump.
Conclusion
The cryptocurrency market is fast-changing and unpredictable. Similarly, short-squeeze indicators do not guarantee that these events will actually happen.
Short positions might increase for different reasons, including poor fundamentals or bearish news related to the project. Investors must remain cautious and consider the whole context around each potential cryptocurrency.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Read the full article here