Increased Short Positions in Cryptocurrencies
Some cryptocurrencies have seen a rise in short positions in the last 12 and 24 hours. This could indicate a strong bearish sentiment in the cryptocurrency market, but it also presents short-squeeze opportunities for bullish traders.
You can analyze short positions by comparing them to the asset’s market cap, exchange volume, and long positions. The higher the adjusted amount of short positions against these benchmarks, the stronger the bearish sentiment or the potential for a short squeeze.
Long/short ratio data from CoinGlass on November 21 showed that two cryptocurrencies in the index’s top 10 have significant imbalances with high capitalized short positions.
Short Squeeze Alert for Dogecoin (DOGE)
Dogecoin (DOGE) has experienced a surge in derivatives volume, resulting in $718.23 million worth of short positions in the last 24 hours. Long positions are worth $627.60 million, with a ratio of 53.35% against 46.63%, respectively. These numbers are higher than XRP’s long and short positions, despite XRP having a larger market capitalization than Dogecoin. DOGE is currently trading at $0.0771.
The amount of short positions opened in the last 24 hours is higher than DOGE’s 24-hour spot volume of $675.70 million and equals 6.5% of its market cap of $10.94 billion, indicating the potential for a short squeeze at any time.
Chainlink (LINK) Short Squeeze or Bearish Sign?
Chainlink (LINK) is another cryptocurrency heavily weighted toward short positions and was previously featured in a short squeeze alert for November 17.
Despite this, the anticipated short squeeze did not occur, possibly due to a predominant bearish sentiment caused by recent news about stablecoins affecting Chainlink’s performance.
However, with $589.77 million worth of short positions opened in the last 24 hours, there are still relevant risks of a short squeeze for LINK, accounting for 52.51% of shorts.
Chainlink’s $7.94 billion market cap and $649.87 million exchange volume further increase the relevance of the current bearish sentiment that traders could explore with a potential short squeeze.
Hot Take: Analyzing Short Positions
While increased short positions in certain cryptocurrencies can signal bearish sentiments and potential for a short squeeze, there are no guarantees that this will happen. It’s essential for crypto investors to conduct thorough research and consider various factors before making financial decisions based on this data.
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