Bitcoin Rallies, Short Squeeze Potential Remains for Cardano and Ripple
Bitcoin (BTC) has once again surged above $71,000, signaling the possibility of new record highs for the cryptocurrency market. However, amidst this positive trend, some cryptocurrencies still offer potential for a short squeeze. A short squeeze occurs when short positions are liquidated in a series, creating upward pressure on prices. In this article, we will explore the short squeeze potential for Cardano (ADA) and Ripple (XRP).
Cardano (ADA)
Cardano (ADA) stands out as one of the few top cryptocurrencies with a strong potential for a short squeeze. This is primarily due to its meaningful liquidity pools to the upside and limited liquidity in the opposite direction.
Last week, ADA experienced a long squeeze that resulted in a massive crash to the $0.55 zone, liquidating bullish traders. A similar scenario against bearish traders could drive Cardanoโs token above $0.8.
In fact, there has been an ongoing movement of opening short positions in ADA. Over the past 24 hours alone, $555.86 million worth of shorts have been opened, accounting for 52.95% of Cardanoโs daily volume in the derivatives market. Currently, ADA trades at $0.732.
Ripple (XRP)
Ripple (XRP) also presents potential for a short squeeze, although its remaining liquidity is lower compared to Cardano. The XRP token has seen significant short liquidations from its current price towards the $0.66 level.
However, the most notable concentration of open interest is to the downside. Unlike ADA, XRPโs crash did not result in massive liquidation down to $0.51. As a result, this region still serves as a possible target in the coming days.
A short squeeze to $0.66 could encourage more long positions, thereby increasing the downward liquidity pool and the likelihood of a future long squeeze in a sell-off to $0.5. Currently, XRP trades slightly above $0.63.
Summary
In summary, both Cardano (ADA) and Ripple (XRP) have the potential for a short squeeze, which could lead to gains of 9.5% and 4.75% respectively. However, if Bitcoin continues its upward trajectory, these tokens may exceed these expectations.
On the other hand, there is a prevailing positive sentiment that favors the opening of long positions and results in opposite liquidations. These liquidity pools could be further exploited in the coming weeks for a long squeeze. Therefore, traders must exercise caution and carefully assess their risks when speculating in the crypto market.
Hot Take: Short Squeeze Opportunities Arise for ADA and XRP
Bitcoinโs recent rally has brought attention to potential short squeeze opportunities in the cryptocurrency market. Cardano (ADA) and Ripple (XRP) stand out as two cryptocurrencies with significant short squeeze potential. By understanding these dynamics, traders can make informed decisions and potentially capitalize on market movements.
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