The cryptocurrency market experienced a pullback following the Federal Reserve’s interest rate decision, which was closely watched in March. With the retreat, there was an increase in the number of investors taking short positions in cryptocurrencies, driven by fear of missing out (FOMO), leading to a rise in short sales. These short sales could eventually force investors to buy back cryptocurrencies, potentially triggering a price increase and initiating a potential uptrend. A monthly price and position review shows significant activity for XRP (XRP) and Avalanche (AVAX).
Will XRP Price Rise and End Short Positions?
Recently, XRP experienced a major sensation with the hacking of Chris Larsen’s personal accounts, resulting in a loss of 112 million dollars. The incident caused a 7% drop in the price. Speaking of Larsen, he is the creator of XRP and the Co-Founder and Executive Chairman of Ripple, the large company that acts as a source of sales for the token.
Following the hack, investors developed a sentiment to open counter positions in XRP, and as a result, the declines deepened. The short sales that took place brought with them a massive liquidity pool, which now seems to provide an opportunity for investors to look for a short squeeze.
A high short liquidation point for XRP is seen at the 0.6 dollar level. If the price moves to this point, investors who are considering or have already made purchases can gain a 20% profit for their XRP coins at the 0.5 level.
Will Avalanche (AVAX) Price Increase?
On the other hand, Avalanche (AVAX) is also among the altcoins signaling a potential short squeeze in the coming days. The native token of the Layer-1 blockchain maintains large liquidity pools at four different points during its upward movement.
The first of these is at 38.3 dollars, followed by 39.4 dollars, the largest at 42.05 dollars, and finally at 42.9 dollars. Considering the current levels, a short squeeze to the top of the liquidity pools could lead to a 16.8% increase from AVAX’s price of 36 dollars at the time of writing.
According to the data, a rise in BTC price might be needed first for these predictions to materialize. The presence of liquidity pools only at upward price points may not be the only requirement for a short squeeze.
