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Short squeeze alert for December 7: Two cryptocurrencies with potential to skyrocket

Short squeeze alert for December 7: Two cryptocurrencies with potential to skyrocket

Euphory and greed are dominating sentiments in the cryptocurrency market at this point. Most traders and investors expect further growth and call for a bull market for Bitcoin (BTC) and altcoins in the coming days.

Nevertheless, bearish sentiment is rising for two cryptocurrencies, with an increased number of short positions recently opened. If the overall positive sentiment turns to them, these two digital assets could face a short squeeze at any moment.

In order to evaluate the short squeeze risk and opportunity, Finbold gathered derivative market data from CoinGlass on December 6. Notably, their volume is heavily weighted toward shorts over long positions in both the 12 and 24-hour time frames.

The aforementioned cryptocurrencies are dYdX (DYDX) and Chainlink (LINK).

dYdX (DYDX) massive short squeeze alert

Interestingly, dYdX is now ethDYDX with a recent token migration to its own chain, while the most liquid asset is still the ERC-20 one, running on Ethereum. The unlock of a massive amount of tokens contributes to the surge of short positions.

DYDX short-sellers opened $173.84 million (54.46%) bearish positions in the last 12 hours and $301.98 million (53.73%) in a day. Meanwhile, the token is trading at $2.95 with 4.41% losses at the time of publication.

DYDX Long/Short ratio on 12 and 24 hours
DYDX Long/Short ratio on 12 and 24 hours. Source: CoinGlass

The total open interest in short positions is 1.37 times higher than its 24-hour volume of $220.29, which is already 34.27% of DYDX’s market cap — representing a huge weight of value.

dYdX market cap and volume (24h).
dYdX market cap and volume (24h). Source: CoinMarketCap

With one of the market’s highest long/short ratios, DYDX is an appealing candidate for a short squeeze.

Chainlink is another appealing candidate, considering its framework is used by many protocols in decentralized finance (DeFi). Essentially, a global bull market could increase the demand for its solution, pivoting from the current bearish dominance.

The $675.07 million 24-hour opened short positions (52%) is notable. Of which $331.54 million were opened in the last 12 hours, while LINK is trading at $15.62 by press time.

LINK Long/Short ratio on 12 and 24 hours.
LINK Long/Short ratio on 12 and 24 hours. Source: CoinGlass

These are also a relevant weight in comparison to the $802 million volume surging by 51% in the day. LINK currently has a $8.7 billion market cap, and an increased demand could trigger the awaited short squeeze.

Chainlink market cap and volume (24h)
Chainlink market cap and volume (24h). Source: CoinMarketCap

All things considered, there are no guarantees that a short squeeze will happen with these cryptocurrencies. Crypto investors must do their own research and consider other data to make profitable financial decisions.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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