The cryptocurrency market is experiencing a period of recovery after a significant downturn, with investors closely monitoring the price movements of altcoins. This calm atmosphere, however, is punctuated by the potential for short squeezes, where investors betting against the market are forced to liquidate, driving prices up.
Filecoin’s Potential for a Short Squeeze
Filecoin (FIL) is identified as a prime candidate for a short squeeze, given the current market conditions. With significant open interest in short positions, FIL could see a price increase if liquidity is collected at current levels, potentially leading to a 4% gain.
Dogecoin (DOGE), the leading meme coin, also fits the short squeeze scenario over a longer time frame. However, the likelihood of such an event can change with the broadening of the time frame considered.
The 3-day and weekly heat maps from CoinGlass highlight Filecoin’s unique position in the market, with the potential to climb to $5.5 this week from its current price of $5.29.
Expectations for Dogecoin’s Movement
Dogecoin, on the other hand, has accumulated enough open interest in short positions to suggest a possible short squeeze in February. The liquidity pool for DOGE is eyeing the $0.0948 level on a monthly time frame, indicating a potential 17% increase.
Short-term analysis shows that traders with long positions on Dogecoin are already causing liquidations of short positions through price increases, setting the stage for a more significant rise in the near future.