The cryptocurrency market is slightly trending upwards after a brief retracement. Under this observed volatility and sentiment shift, some cryptocurrencies have unbalances in derivatives.
These unbalances usually lead to massive liquidations, which can come as a short squeeze for over-shorted assets.
Notably, Bitcoin (BTC) is testing the $43,000 price zone again. The leading cryptocurrency lost it on December 11, followed by a rejection last week, from December 13 to 15. Now, crypto investors are eagerly awaiting a break-out or a bounce backward.
BTC/USD 4-hourly price chart on Bitstamp. Source: TradingView
While most cryptocurrencies are following the bullish short-term sentiment of Bitcoin, two of its direct competitors are showing a larger volume of opened short positions in the last 12 and 24 hours — against the long positions open interest.
In particular, Litecoin (LTC) and Bitcoin Cash (BCH) have a higher weight of short-sellers in these time frames. Finbold retrieved this data from CoinGlass on December 19 to make this short squeeze alert.
Short squeeze alert for Litecoin (LTC)
Litecoin, also known as “digital silver,” instead of Bitcoin’s “digital gold,” is trading at $71.16 by press time. LTC is up 3% in the day but is being heavily shorted compared to all other coins in the top 20.
Essentially, there were $74.33 million (53.31%) and $154.11 million (52.40%) short positions opened in the last 12 and 24 hours, respectively. This is opposed to $65.11 million and $140.01 million long positions in the same time frames.
LTC Long/Short ratio on 12 and 24 hours. Source: CoinGlass
In the meantime, Litecoin is ranked 18th with a $5.26 billion market cap. The 24-hour exchange volume is also only $115 million higher than the shorts, which could soon lead to a short-squeeze event.
Litecoin market cap and volume (24h). Source: CoinMarketCap
Bitcoin Cash (BCH) short-sellers could be punished
Interestingly, the most direct competitor for Bitcoin was also being heavily shorted at the time of writing. Bitcoin Cash is trading at $228.33, with around 3% daily gains and $103.98 million of short positions in the last 24 hours.
Moreover, $52.46 million of these shorts were opened in the last 12 hours, both accounting for 51.83% and 52.87% of the respective open interest volumes.
BCH Long/Short ratio on 12 and 24 hours. Source: CoinGlass
However, BCH is less likely to suffer a short squeeze than LTC, considering both have similar capitalization and exchange volume.
All things considered, there are no guarantees that such an event will happen with these cryptocurrencies. Cryptocurrency traders 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.
