Potential Short Squeeze Ahead for Cardano (ADA) and Ripple (XRP)
Bitcoin (BTC) has been on a bullish run, nearing the $71,000 mark and creating excitement in the cryptocurrency market. However, amidst this positive trend, there are two cryptocurrencies that have caught the attention of traders due to their potential for a short squeeze.
A short squeeze occurs when short positions are forced to close, leading to a surge in buying activity and driving up the price. This happens when the price reaches liquidity pools created by traders who have opened short positions.
One cryptocurrency that is showing strong potential for a short squeeze is Cardano (ADA). ADA recently experienced a long squeeze, resulting in a drastic drop to the $0.55 zone. If a similar occurrence were to happen to bearish traders, it could push Cardano’s token above $0.8. Currently, there is a significant amount of short positions being opened, with $555.86 million in shorts opened in the past 24 hours. This dominance in the derivatives market, accounting for 52.95% of Cardano’s daily volume, indicates the possibility of a short squeeze.
Another cryptocurrency with potential for a short squeeze is Ripple (XRP). Although the liquidity for a short squeeze is lower compared to Cardano, there are still relevant liquidations that could drive the price towards the $0.66 level. The crash in XRP’s price was not enough to liquidate a significant liquidity pool at $0.51, making it a possible target for future short squeezes. With a squeeze to $0.66, more long positions could be encouraged, increasing the downward liquidity pool and raising the chances of a future long squeeze down to $0.5.
If these short squeezes were to occur, Cardano could potentially see a gain of 9.5%, while Ripple could see a gain of 4.75%. However, if Bitcoin’s rally continues, both tokens might surpass these expectations.
It’s important to note that while positive sentiment may lead to the opening of long positions, which could potentially result in opposite liquidations, the market remains speculative and traders should exercise caution and carefully evaluate their risks.
Disclaimer: The information provided should not be considered investment advice. Investing in cryptocurrencies carries risks, and it’s essential to be aware that your capital is at risk.