Recent market indicators suggest that certain altcoins, particularly BNB Chain (BNB) and Toncoin (TON), might be on the verge of experiencing a short squeeze. A short squeeze happens when the price of a heavily shorted asset rises sharply, forcing short sellers to close their positions, which further drives up the price. Investors are closely monitoring these signals for potential gains.
Why BNB May Surge?
Since April 9, the altcoin market has largely mirrored Bitcoin‘s (BTC) downward trend. Bitcoin is currently trading at $61,405 and is facing resistance at the 30-day exponential moving average (30-EMA). This period of low volatility could soon erupt into significant upward movement, potentially sparking a short squeeze for some altcoins, including BNB.
Could TON Follow Suit?
BNB shows various signs pointing to a potential short squeeze. It holds the seventh-largest open interest in the market and the second-highest negative funding rate. Short sellers are paying long position investors an annual percentage rate (APR) of 64%, making a short squeeze likely. This could drive BNB’s price to a significant liquidation pool around $610 per token, offering a potential 5% gain for investors entering at current prices.
Toncoin (TON) is another candidate for a short squeeze, primarily due to an excessively negative funding rate of 111.95%, the highest among crypto derivatives. Although its open interest is lower than BNB’s, this severe negative funding rate indicates that a reversal in the downtrend could trigger a short squeeze. TON has notable liquidity pools for short position liquidations at $7.2 and $7.4 per token. With TON currently trading at $6.7, a short squeeze could result in a 10% rise.
Key Takeaways for Investors
– BNB holds the seventh-largest open interest and second-highest negative funding rate in the market.
– Short sellers are paying long position investors a high APR, increasing the likelihood of a short squeeze.
– TON has the most negative funding rate among crypto derivatives, signaling potential for a short squeeze.
– Key liquidity pools for TON are at $7.2 and $7.4, indicating potential gains.
Potential Risks
Despite the indicators suggesting a possible short squeeze for BNB and TON, investors remain cautious. The cryptocurrency market is notoriously volatile, and other factors could prevent the anticipated trend reversals. Leveraged positions, in particular, carry significant risks, and investors must manage these risks effectively.
In conclusion, current market conditions and specific indicators for BNB and TON suggest these altcoins might soon experience a short squeeze. High open interest volumes, negative funding rates, and accumulated liquidations create a favorable environment for such a scenario.