dYdX (DYDX) massive short squeeze alert
Euphoria and greed are dominating sentiments in the cryptocurrency market at this point. Most traders and investors expect further growth and call for a bull market for Bitcoin (BTC) and altcoins in the coming days. Nevertheless, bearish sentiment is rising for two cryptocurrencies, with an increased number of short positions recently opened. If the overall positive sentiment turns to them, these two digital assets could face a short squeeze at any moment.
In order to evaluate the short squeeze risk and opportunity, Finbold gathered derivative market data from CoinGlass on December 6. Notably, their volume is heavily weighted toward shorts over long positions in both the 12 and 24-hour time frames. The aforementioned cryptocurrencies are dYdX (DYDX) and Chainlink (LINK).
dYdX (DYDX) massive short squeeze alert
Interestingly, dYdX is now ethDYDX with a recent token migration to its own chain, while the most liquid asset is still the ERC-20 one, running on Ethereum. The unlock of a massive amount of tokens contributes to the surge of short positions. DYDX short-sellers opened $173.84 million (54.46%) bearish positions in the last 12 hours and $301.98 million (53.73%) in a day. Meanwhile, the token is trading at $2.95 with 4.41% losses at the time of publication.
The total open interest in short positions is 1.37 times higher than its 24-hour volume of $220.29, which is already 34.27% of DYDX’s market cap — representing a huge weight of value.
With one of the market’s highest long/short ratios, DYDX is an appealing candidate for a short squeeze.
Chainlink (LINK) to face a short squeeze
Chainlink is another appealing candidate, considering its framework is used by many protocols in decentralized finance (DeFi). Essentially, a global bull market could increase the demand for its solution, pivoting from the current bearish dominance.
The $675.07 million 24-hour opened short positions (52%) is notable. Of which $331.54 million were opened in the last 12 hours, while LINK is trading at $15.62 by press time.
These are also a relevant weight in comparison to the $802 million volume surging by 51% in the day. LINK currently has a $8.7 billion market cap, and an increased demand could trigger the awaited short squeeze.
All things considered, there are no guarantees that a short squeeze will happen with these cryptocurrencies. Crypto investors must do their own research and consider other data to make profitable financial decisions.
Hot Take: The Risk of Short Squeezes on dYdX and Chainlink
Euphoria and greed dominate the cryptocurrency market, with traders and investors anticipating further growth and calling for a bull market for Bitcoin (BTC) and altcoins. However, two cryptocurrencies—dYdX (DYDX) and Chainlink (LINK)—are facing increasing bearish sentiment as more short positions are opened. This raises the possibility of a short squeeze for these digital assets.
dYdX has seen a surge in short positions due to its recent token migration to its own chain, contributing to the unlock of a significant number of tokens. The total open interest in short positions exceeds its 24-hour volume by 1.37 times, making it an attractive candidate for a short squeeze. Similarly, Chainlink’s framework is widely used in decentralized finance (DeFi), and an increase in demand during a global bull market could trigger the awaited short squeeze.
While there are no guarantees of a short squeeze occurring, crypto investors should conduct their own research and consider other data before making financial decisions.
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