Bitcoin’s (BTC) dominance is back to local resistance, nearing 55%, while the altcoins lost strength against the leading cryptocurrency. As this occurs, crypto traders favored opening short positions against cryptocurrencies that could soon skyrocket with a short squeeze.
Notably, the Bitcoin Dominance Index (BTC.D) is 54.64%, currently above the 50-day exponential moving average (EMA). The BTC.D nears a local top at 55.26% as Bitcoin gains strength against altcoins, mostly of which traders have been increasingly shorting.
As a result, some of these cryptocurrencies accumulate relevant liquidation pools upwards, potentially triggering short squeezes next week.
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Short squeeze alert for Cardano (ADA)
In particular, Cardano (ADA) has accumulated massive short interest after losing its position in the top 10 cryptocurrencies by capitalization.
On that note, ADA has the potential to skyrocket from the current $0.58 to above $0.68. This represents a potential 17.25% increase in price if a short squeeze liquidates these short-sellers.
Furthermore, futures contracts open interest for Cardano remains at significant historical levels, with proportional low prices. There is circa $400 million in these contracts, according to data retrieved from CoinGlass on April 12.
Dogecoin (DOGE)
Another cryptocurrency with historically high open interest is Dogecoin (DOGE). The leading meme coin has over $1.55 billion with opened positions in the derivatives market, indicating high volatility ahead.
Interestingly, many of these are made of short positions, opened in a similar price range. The mass-shorting has created a dense liquidity pool at $0.21, which market makers could target for a short squeeze.
Dogecoin traded at $0.198 by press time. Therefore, a run to these liquidations would reward DOGE traders with 6% gains.
However, having accumulated liquidity is not enough to ignite short squeezes. These trading events are caused by a conjunction of factors playing together and usually require a fundamental motivation like bullish news as a trigger.
For that reason, traders and investors must follow news and developments related to these cryptocurrencies while making financial decisions.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
