After BlackRock’s disclosure of the risks USDT and USDC can bring to Bitcoin (BTC), the BIS published a study about stablecoins. Majorly with a negative bias, this most recent study triggered bearish volatility in the cryptocurrency market.
As expected, some cryptocurrencies more exposed to this asset class presented a worse performance. However, when bears dominate the overall sentiment, bulls usually see opportunity. In particular, a heavy-weighted amount of short over long positions could proportionate a short-squeeze opportunity for traders.
With that in mind, Finbold retrieved long/short ratio data from CoinGlass on November 17. Notably, two cryptocurrencies among the index’s top 10 are showing a massive unbalance with high capitalized short positions.
In order to filter the most relevant short-squeeze possibilities, Finbold also looked at the total volume of opened shorts in 12 and 24 hours, adjusted by each asset’s market cap and exchanged volume.
Short squeeze alert for Chainlink (LINK)
Chainlink (LINK), the Oracle blockchain built to connect real-world data with the cryptocurrency space, took a huge hit. LINK is trading at $13.47 per token by press time, with losses of 9.20% in the last 24 hours.
In this context, Chainlink’s market capitalization dropped to $7.5 billion with a 24-hour volume of $805 million on crypto exchanges.
Interestingly, its 24-hour short position amount on futures is $773.20 million, for 53.12% of all contracts in this time frame. The 12-hour time frame is as bearish, with $269.47 million for a 53.03% ratio.
Will Polygon (MATIC) be short-squeezed?
Another heavy-weighted cryptocurrency for short positions is Polygon (MATIC). MATIC has slightly fewer opened short contracts in dollars, with $217.51 million (52%) in the last 12 hours and $657.76 million (52.62%) in 24 hours.
Polygon’s native token is trading at $0.83 by press time, losing 10.17% in the day. Nevertheless, MATIC has a slightly higher capitalization of $7.70 billion than LINK’s, with a higher 24-hour volume of $815 million, making it less likely for a short squeeze to happen.
In the meantime, despite a lower proportional ratio among Polygon’s short positions and its volume or capitalization in comparison to Chainlink, both have higher short squeeze signals than most of the other projects.
Essentially, LINK has 10.3% of its market cap in opened short positions in the last 24 hours, while MATIC has 8.5% of the same metric.
It is important to say that there are no guarantees that a short squeeze will happen with these tokens. Investors must do their own research and consider other data to make profitable financial decisions. A higher amount of short positions can also indicate a dominating bearish trend.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.