Short squeeze alert for January 3: Two cryptocurrencies with potential to skyrocket

The cryptocurrency market is retracing after a notable pump on January 2. This past surge caused short-squeeze events for the leading cryptocurrencies, liquidating thousands of crypto short-sellers.

Essentially, a short squeeze happens when short positions get liquidated on a majoritarian bearish market. These liquidations force purchases of the given cryptocurrency, driving the price higher, bringing new liquidations, even higher prices, and a spiral event.

In this context, Finbold looked into derivatives and liquidation data from CoinGlass to spot probable short-squeeze candidates.

Short squeeze alert for Polygon (MATIC)

In particular, Polygon (MATIC) showed a 52.92% weight of $741.80 million in open short positions by press time. Moreover, a 24-hour volume surge of 82.26% happened amid a price crash of close to 13.97%. MATIC is trading at $0.87 at the time of publication.

Notably, this has been a constant for Polygon, building massive liquidity upwards. It is possible to see thousands of dollars worth of liquidations in the 3-day time frame. In the case of a short squeeze, MATIC could be driven to as high as $1.05, after hitting the massive target at $1.035.

Will Cardano (ADA) skyrocket with a short-squeeze event?

Another highly shorted cryptocurrency on January 3 is Cardano (ADA), with $622.82 million (53.68%) of opened shorts. Its native token, ADA, trades at $0.54 by press time, losing 13.24% in 24 hours.

Just like Polygon, Cardano has also experienced a spike in the volume of its derivatives. Interestingly, this observed volatility makes it more likely for a short-squeeze event to happen at any moment.

Additionally, Cardano’s liquidation heatmap also shows massive liquidity spots upward. Market makers can use these liquidity pools as price targets to increase their profits while liquidating traders.

For ADA, a short squeeze could make it skyrocket to as high as $0.65 after liquidating short-sellers at $0.63 and $0.64.

All things considered, there are no guarantees that such an event will happen with these cryptocurrencies. Investors and speculators must do their own research and consider multiple 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.