Bitcoin and Solana Could Experience Short Squeeze and Price Surge

Date: 2024-01-20 Author: Dima Zakharov Categories: BLOCKCHAIN
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Changing Crypto Market Sentiments

In the past seven days, the overall cryptocurrency market has lost $132.5 billion (7.68%). However, the Relative Strength Index (RSI) has slightly recovered from the oversold threshold.

Cryptocurrency Market Capitalization

During this time, individual cryptocurrencies continue to accumulate open short positions in the derivatives market. This scenario favors a short squeeze as lagging traders provide upward liquidity, which can become an attractive target for market makers.

According to CoinGlass, there are numerous short liquidations still generating interest in Bitcoin (BTC) and Solana (SOL).

Analyzing Bitcoin's Potential Short Squeeze

The warning of a Bitcoin short squeeze from January 16 remains in effect as liquidation accumulates at higher prices. Currently, BTC has sufficient liquidity from current prices up to $50,000 over a weekly period.

A three-day liquidation heat map suggests that the short squeeze is gaining strength and could happen as soon as next week. Notably, available liquidity of $207 million is at the $43,323 level, favoring the rapid achievement of these prices.

Bitcoin Liquidation Heat Map

Currently, the price of Bitcoin has dipped in the range of $40,000 to $40,700. However, the 24-hour volume has started to rise again, exceeding $50 billion. In the last 24 hours, traders have opened short positions worth $25.32 billion, with an open interest of $18.12 billion.

Data on Bitcoin Derivatives

Solana (SOL): Short-Term Trend Reversal

Despite a decrease in price, volume, and open interest in the last 24 hours, short positions for Solana have increased by $3.15 billion, accounting for 51.91% of their volume.

This combination of factors suggests that the market may change the current trend and slightly push prices upward. Such behavior should be enough to trigger the nearest liquidation in the range of $95.9 to $96.8 during a short squeeze.

Furthermore, the next attractive target is $100, taking into account Solana's liquidity pools.

Solana Liquidation Heat Map

However, it is essential to understand that concentrated liquidity does not guarantee liquidation will occur. The cryptocurrency market is unpredictable, and everything can change in a matter of hours.
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