Short positions in two cryptocurrencies have increased in the last 12 to 24 hours, indicating bearish sentiment in the cryptocurrency market; However, this volume can create short position reduction opportunities for bullish traders.
In particular, Avalanche (AVAX) and Arbitrum (ARB) are showing a relevant weight of open short positions over the total long positions in the derivatives market. Both open interest caps also accumulate by a significant amount of each spot volume and 24-hour market cap.
Finbold recovered this data from glass coin on Nov. 28, looking for possible short-lived events over a 12- to 24-hour period.
Short squeeze alert for Avalanche (AVAX)
In the last 12 hours, Avalanche recorded $127.01 million in long positions and $141.14 million in short positions (52.63%). The 24-hour period also recorded a similar weight of $274.06 million in shorts (52.14%) over the $251.55 million in longs.
Interestingly, AVAX was changing hands at $20.36 per token at press time, with timid daily gains of 0.57%. This divergence in price action and increased short interest could set the stage for a short squeeze.
Furthermore, the capitalization of short positions represents 80% of the daily exchanged volume of $336.23 million by AVAX, according to CoinMarketCap.
Bearish signal or Arbitrum (ARB) short squeeze?
Meanwhile, Arbitrum has $110.22 million in short positions open in the last 24 hours (53.32%), compared to $96.49 million in long positions. The 12-hour long/short ratio is even higher for shorts, with 54% of all interests betting on a bearish outcome.
However, ARB derivatives also indicate a divergence with the token’s price action, trading at $1.01 with gains of 1.14% on the day. Unlike Avalanche, Arbitrum’s short positions account for 55% of the daily volume of $198.5 million.
In this case, the divergence is less likely to initiate a short squeeze and could represent a trend reversal for ARB unless sentiment changes. However, the high weighting against long positions could incentivize market makers to hunt this available liquidity.
It is important to say that there are no guarantees that a short squeeze will occur with these cryptocurrencies. Cryptocurrency investors should do their own research and consider other data to make profitable financial decisions.
Disclaimer: The content of this site should not be considered investment advice. The investment is speculative. When investing, your capital is at risk.
