Low Volatility in the Cryptocurrency Market
After a period of high volatility, the cryptocurrency market has experienced a decrease in volatility on November 23. This is evident from the plummeting trading volume, indicating a temporary lack of interest in speculative long and short positions.
Finding Short Squeeze Potential
Despite the reduced open interest volume, there are still opportunities to identify potential short squeezes. One way to do this is by examining the correlation between opened short positions and traded volume within a specific time frame.
Cryptocurrencies with Short Squeeze Potential
There are four projects that show growing potential for a short squeeze if market sentiment shifts from bearish to bullish by the end of the weekend.
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) currently has $52.61 million worth of opened short positions, accounting for 52.62% of its 12-hour open interest.
Avalanche (AVAX)
Avalanche (AVAX) has $216.49 million (51.83%) of opened short positions, indicating a significant potential for a short squeeze.
Polkadot (DOT)
Polkadot (DOT) has $44.55 million (52.51%) of opened short positions, making it another cryptocurrency with short squeeze potential.
Tellor Network Token Tributes (TRB)
The Tellor Network token Tributes (TRB) has $120.21 million (52.25%) of opened short positions, suggesting a high likelihood of a short squeeze.
Tellor (TRB)
Tellor (TRB) stands out as it has the highest weight in its opened short positions. The $120.21 million shorts opened in the last 12 hours are 2.4 times higher than Tellor’s 24-hour exchange volume of $49.48 million. This raises concerns about the token’s future, especially since the short positions open interest capitalization is less than half of its total market cap of $222.51 million.
Investors and traders should exercise caution when considering a short squeeze attempt for TRB, as the token has already risen by 700% in the past year. It is possible that the increased short positions are a response to this significant growth, indicating that TRB may be overbought at this point. However, any substantial increase in demand could lead to the liquidation of short-sellers in a short period of time.
Avalanche (AVAX)
Avalanche (AVAX) is currently trading at $20.72 with a market capitalization of $7.37 billion and a 24-hour volume that represents 7.5% of its market cap.
Avalanche has a notable weight of short positions relative to these metrics, accounting for 41% of the mentioned exchange volume and 2.93% of the total market value.
It is worth mentioning that JPMorgan has selected Avalanche for its blockchain initiative, which could potentially generate fresh demand for AVAX. As a result, AVAX may experience a short squeeze in the coming days.
Interestingly, both Tellor and Avalanche have previously witnessed high liquidation events against short-sellers. The dominance of bearish sentiment could trigger short squeezes for these cryptocurrencies or contribute to a significant downtrend for the remainder of the week.
Hot Take: Short Squeeze Potential for TRB and AVAX
Based on the analysis, Tellor (TRB) and Avalanche (AVAX) have emerged as cryptocurrencies with significant short squeeze potential. TRB’s high weight in opened short positions, coupled with its 12-month price surge, presents an interesting opportunity for short-sellers. However, a surge in demand could lead to the liquidation of these positions. Similarly, AVAX’s growing market cap and its selection by JPMorgan for a blockchain project make it an attractive candidate for a short squeeze. Traders should keep a close eye on these two cryptocurrencies as they may offer exciting trading opportunities in the near future.
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