The volume of cryptocurrency derivatives has seen a significant increase, raising concerns over potential market imbalances that could trigger liquidation events. This situation has led to a rise in short positions for certain cryptocurrencies, heightening the possibility of a short squeeze. A short squeeze typically indicates a price rally, but which altcoins are experiencing this surge?
The total market value of the cryptocurrency space has risen by 1.5%, reaching a 10-day high of $1.614 trillion. The market’s focus has shifted to cryptocurrencies with high short positions, especially if the market value surpasses this month’s peak levels.
Among the cryptocurrencies with increased short positions, Dogecoin (DOGE) stands out. DOGE is currently trading at $0.0926, with a 24-hour open short position value of $514.56 million, accounting for 51.31% of the daily open position volume.
This substantial dollar value is close to DOGE’s 24-hour spot exchange volume of $550.27 million, making the potential liquidation of short positions a significant factor affecting DOGE’s price.
Simultaneously, the cryptocurrency dYdX (DYDX) witnessed a short position of $188.57 million opened on December 21. DYDX is trading at $2.957, and despite a 24-hour volume of only $132.69 million, which signals a larger short position, a market reversal from a downtrend to an uptrend is required for a short squeeze to occur.
Recent changes such as token migrations and the unlocking of over 80% of the circulating supply have added complexity to DYDX’s market dynamics. While the potential for a short squeeze is becoming apparent, a market turnaround is crucial for these events to unfold. Investors are advised to conduct thorough research and consider complementary data to make informed and profitable financial decisions.