Unbalanced Derivatives in the Cryptocurrency Market
The cryptocurrency market is currently experiencing a slight upward trend after a temporary retracement. During this period of volatility and shifting sentiment, some cryptocurrencies are showing imbalances in their derivatives.
These imbalances often lead to significant liquidations, which can result in a short squeeze for assets that have been heavily shorted.
Bitcoin (BTC), for example, is currently testing the $43,000 price zone once again. After losing this level on December 11 and facing rejection last week from December 13 to 15, crypto investors are eagerly awaiting either a breakout or a bounce-back.
LTC: A Short Squeeze Alert
While most cryptocurrencies are following Bitcoin’s bullish short-term sentiment, two of its direct competitors, Litecoin (LTC) and Bitcoin Cash (BCH), have a higher number of opened short positions compared to long positions open interest in the past 12 and 24 hours.
Litecoin, often referred to as “digital silver,” is currently trading at $71.16. Although it has seen a 3% increase in the day, it is heavily shorted compared to other top 20 coins.
In the last 12 and 24 hours, there were $74.33 million (53.31%) and $154.11 million (52.40%) short positions opened, respectively, while long positions accounted for $65.11 million and $140.01 million during the same time frames.
With a market cap of $5.26 billion and an exchange volume just slightly higher than the shorts at $115 million, Litecoin could potentially experience a short squeeze event.
BCH: Short-Sellers Could Face Consequences
Bitcoin Cash (BCH), the most direct competitor to Bitcoin, is also heavily shorted at the moment. It is currently trading at $228.33 with approximately 3% daily gains and $103.98 million worth of short positions in the last 24 hours.
Within the past 12 hours, $52.46 million of these shorts were opened, accounting for 51.83% and 52.87% of the respective open interest volumes.
However, BCH is less likely to experience a short squeeze compared to LTC, as both cryptocurrencies have similar capitalization and exchange volume.
Proceed with Caution
It’s important to note that there are no guarantees that a short squeeze will occur with these cryptocurrencies. As a cryptocurrency trader, it is crucial to conduct your own research and consider other relevant data when making financial decisions.
Hot Take: Potential Short Squeezes for LTC and BCH
The cryptocurrency market is witnessing potential short squeeze scenarios for Litecoin (LTC) and Bitcoin Cash (BCH). Both cryptocurrencies have seen a higher number of opened short positions compared to long positions in the past 12 and 24 hours.
LTC, often referred to as “digital silver,” has attracted significant short-selling interest despite its positive daily gains. With a market cap of $5.26 billion and an exchange volume only slightly higher than its shorts, Litecoin could be vulnerable to a short squeeze event.
BCH, on the other hand, faces similar circumstances with heavy shorting activity. Although it has a comparable market capitalization and exchange volume to LTC, it may be less likely to experience a short squeeze.
As always, it is essential for cryptocurrency traders to conduct thorough research and consider various factors before making any financial decisions.
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