Short positions in two cryptocurrencies have risen in the past 12 to 24 hours, indicating a bearish sentiment in the cryptocurrency market; however, this volume may lead to short-squeeze opportunities for bullish traders.
Particularly, Avalanche (AVAX) and Arbitrum (ARB) are showing a relevant weight of opened shorts over the total long positions in the derivative market. Both open interest capitalization also accrues for a meaningful amount of each 24-hour spot volume and market cap.
Finbold retrieved this data from CoinGlass on November 28, looking for possible short-squeeze events in a 12 to 24-hour time frame.
AVAX Long/Short ratio on 12 and 24 hours. Source: CoinGlass
Interestingly, AVAX was changing hands by $20.36 per token at the time of publication, with shy daily gains of 0.57%. This divergence of price action and increased shorts interest might create the proper scenario for a short squeeze.
Moreover, the short-positions capitalization accrues for 80% of the $336.23 million daily exchanged volume for AVAX, according to CoinMarketCap.
Avalanche market cap and volume (24h). Source: CoinMarketCap
Arbitrum (ARB) short squeeze or bearish signal?
Meanwhile, Arbitrum has $110.22 million of short positions opened in the last 24 hours (53.32%), against $96.49 million longs. The 12-hour long/short ratio is even higher for shorts, with 54% of all interests betting on a bearish outcome.
ARB Long/Short ratio on 12 and 24 hours. Source: CoinGlass
However, ARB derivatives are also indicating a divergence with the token’s price action, trading at $1.01 with 1.14% gains in the day. Unlike Avalanche, Arbitrum shorts are 55% of the $198.50 million daily volume.
Avalanche market cap and volume (24h). Source: CoinMarketCap
In this case, the divergence is less likely to start a short squeeze and could represent a trend reversal for ARB unless sentiment shifts. Nevertheless, the high weight against longs could incentivize market makers to hunt this available liquidity.
It is important to say that there are no guarantees that a short squeeze will happen with these cryptocurrencies. Crypto investors 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.
