Short squeeze alert for May: 2 cryptocurrencies with skyrocketing potential

The cryptocurrency market shifted from bearish to bullish as the week ended, following nonfarm payroll data reported on May 3. After days of continuous short-selling pressure, some cryptocurrencies display skyrocketing potential within the possibility of a short squeeze.

Notably, TradingView‘s total crypto market cap index surged by over $277 billion month-to-date from a local bottom on May 1. On May 4, the index reached a $2.318 trillion capitalization local high, up over 13% in three days.

However, previous fear, uncertainty, and doubt (FUD) led cryptocurrency traders to massively short Bitcoin (BTC) and other cryptocurrencies. Thus, this increases the likelihood of short-squeeze events for BTC and targets higher prices, as reported by Finbold on May 3.

In addition, Finbold spotted two cryptocurrencies in a similar situation, with negative funding rates and accumulated short-position liquidations.

Short squeeze alert for BNB Chain (BNB)

The BNB Chain’s (BNB) current funding rate is the leading signal for a potential short squeeze to Binance‘s native token. We retrieved this data on May 4 from the CoinGlass 30-day funding rate heatmap.

In particular, BNB short-sellers are paying a 32.63% APR for long-position traders, which could fuel short liquidations. The BNB Chain has the sixth-largest open interest in the derivatives market, increasing this signal’s relevancy.

As for the price targets, BNB has short-position liquidity pools from $600 to $630, currently trading slightly below this level.

Bitcoin Cash (BCH)

Bitcoin Cash (BCH) has an even higher negative funding rate of 35.96%, the 10th-largest cryptocurrency ordered by open interest.

While BCH’s liquidity pools are less concentrated than BNB’s, the coin’s current price is far below the pending liquidations. Interestingly, there are unbalances in a large range from $500 to above $700. This offers a skyrocketing potential that could result in over 40% gains if Bitcoin Cash suffers a short squeeze.

However, despite the above economic analysis, these cryptocurrencies could still display negative price performance in the next few days. Short squeeze technical indicators do not guarantee the event will happen. Things can quickly change as the market moves, so investors must remain cautious.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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