Recently, the cryptocurrency market has witnessed a significant increase in the volume of crypto derivatives, leading to an imbalance between short (short) and long (long) positions. This imbalance can trigger mass liquidations, especially in the case of cryptocurrencies with a predominance of short positions.
The total market capitalization of cryptocurrencies reached a 10-day peak of $1.614 trillion, increasing by 1.5% in a day. If this trend continues and exceeds monthly highs, currencies with a large number of shorts may experience a short squeeze.
Particular attention is paid to two tokens: Dogecoin (DOGE) and dYdX (DYDX), where an increase in short positions compared to long ones is observed. For example, short positions on DOGE amounted to $514.56 million, which is more than half of the total volume of open positions for the day. This can significantly affect the price of DOGE in the short term.
As for DYDX, short positions amounted to $188.57 million. Considering that the 24-hour trading volume of this token was only $132.69 million, this indicates a significant predominance of shorts in the market.
For a short squeeze to occur, a confident transition of the market from a bearish to a bullish trend is necessary. Recently, DYDX has undergone significant changes, including token migration and mass unlocking, which may affect investors' perception of the value of this asset.
