Crypto derivatives volume surged, leaving some unbalances behind, which could trigger liquidation events. On that, some cryptocurrencies have seen increased short positions that, if liquidated, would cause a short squeeze.
In the meantime, the cryptocurrency market’s total capitalization has reached a 10-day high of $1.614 trillion, up 1.5% on the day. If the crypto total market cap breaks this month’s highs, high-shorted coins will likely experience short squeezes.
CRYPTOCAP: Total market cap (4h chart). Source: TradingView
Finbold then retrieved open interest data in the last 12 and 24 hours from CoinGlass’s long/short ratio dashboard. In particular, we spotted Dogecoin (DOGE) and dYdX (DYDX) as two cryptocurrencies with increased short over the long positions.
DOGE Long/Short ratio on 12 and 24 hours. Source: CoinGlass
This massive U.S. Dollar worth corresponds to almost the same 24-hour spot exchange volume of $550.27 million. Therefore, a short-squeeze liquidation event could have a relevant impact on DOGE’s price.
Dogecoin market cap and volume (24h). Source: CoinMarketCap
DYDX is being shorted on December 21
Meanwhile, DYDX has seen $188.57 million (53.06%) in shorts opened on December 21, trading at $2.957.
DYDX Long/Short ratio on 12 and 24 hours. Source: CoinGlass
Interestingly, the decentralized exchange token has only $132.69 million in 24-hour volume. This means a larger amount of short positions for what is currently trading on multiple markets, according to CoinMarketCap.
DYDX market cap and volume (24h). Source: CoinMarketCap
However, a short squeeze still needs a market pivot from bearish to bullish in order to happen. DYDX has been through meaningful changes and token migration in the past few days, also experiencing a massive token unlock for over 80% of its circulating supply. Such an inflation could have impacted cryptocurrency investors’ perception of the digital asset’s value.
All things considered, there are no guarantees that such an event will happen with these cryptocurrencies. Traders must do their own research and consider complimentary 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.
