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Short squeeze alert for next week: Two cryptocurrencies with potential to skyrocket

Short squeeze alert for next week: Two cryptocurrencies with potential to skyrocket

Recent events in the cryptocurrency market completely shifted sentiment from neutral to bullish. The SEC finally approved Bitcoin spot ETFs, igniting a bull rally for most cryptocurrencies.

In this occurrence, traders closed millions of dollars worth of short positions, reducing the likelihood of short squeezes. Nevertheless, it is still possible to find small liquidity pools in the market, which can quickly become market makers’ targets.

By opening a short position, traders create liquidity pools upwards, due to stop losses and pre-defined margin call prices. Essentially, if the cryptocurrency reaches these prices, the positions are closed or liquidated, skyrocketing the price on further liquidity pools. This is what is called a short squeeze.

In particular, Dogecoin (DOGE) and BNB Chain (BNB) still have some liquidity at higher price levels despite their low volume. Finbold used data from CoinGlass, retrieved on January 11.

Short squeeze alert for Dogecoin (DOGE)

Dogecoin is trading at $0.08483 by press time, up 7.18% in the last 24 hours. However, DOGE registers a 32% volume loss of $1.33 billion in derivatives operations. From that, $703.37 million (51.18%) are recently opened short positions.

DOGE derivatives market volume. Source: CoinGlass

As observed in the following heatmap, these short-sellers might contribute to the formation of higher liquidity pools. Notably, the weekly liquidation chart shows a concentration above $0.086. Moreover, DOGE already started liquidating some positions as the leading meme coin moves closer to this price range.

DOGE 1-week liquidation heatmap. Source: CoinGlass

BNB Chain (BNB) already short-squeezed; is there more?

In the meantime, BNB has already proved the efficiency of liquidity pool analysis. On January 9, Finbold posted a short-squeeze alert for the token, which happened as expected. Currently, BNB Chain trades at $315 with both upward and downward liquidity.

BNB 1-week liquidation heatmap. Source: CoinGlass

In closing, the low volume for the two cryptocurrencies could prevent a short squeeze from happening. Even then, the price might continue surging if the market holds bullish momentum.

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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