Two Cryptocurrencies Poised for Potential Short Squeezes This Week
Recently, many cryptocurrencies have undergone a short squeeze, driven by a shift to bullish market sentiment. A short squeeze occurs in the cryptocurrency market when a large number of bearish traders open short positions, leading to increased liquidity and upward pressure on prices.
With limited digital assets remaining for a potential short squeeze this week, Filecoin (FIL) emerges as a key laggard with significant upside liquidations, while Dogecoin (DOGE) is identified as a leading candidate for such a squeeze from a longer-term perspective.
FIL and DOGE Trends
With bearish traders dominating the Filecoin market and holding substantial short positions, a short squeeze could be imminent.
Should the FIL positions be sold off, the price tag for FIL might rise to around $5.5 this week, yielding almost a 4% boost in value.
In longer trading periods, there is a substantial buildup of short positions on Dogecoin that could lead to a considerable short squeeze happening in February.
DOGE’s potential rise of around 17% can be attributed to the goal of maintaining a monthly liquidity target of $0.0948 per coin, which could bring gains for investors and losses for short sellers.
However, it’s essential to remember a few best practices while navigating investment decisions.
It’s risky to base your cryptocurrency investment decisions solely on short-squeeze indicators due to the unpredictable nature of the market. Bullish sentiment shifts in the market trigger short squeezes, but they do not guarantee specific price levels or outcomes.
Before making a crypto investment, it’s crucial to examine both the fundamental aspects and recent news surrounding that digital currency. Short positions can increase due to various reasons, such as poor project fundamentals or negative market news.
Keeping current with news about individual cryptocurrencies is crucial for successful navigation in the crypto market and wise investing decisions.
By staying vigilant and considering all factors, investors can position themselves for potential gains during a short squeeze event.
Angel Marinov is the Managing Editor at Coinlabz. With extensive knowledge of crypto payments and blockchain use cases, Angel is a trusted source of accurate and timely information