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Recent market indicators point to a potential short squeeze for certain altcoins, especially BNB Chain (BNB) and Toncoin (TON). A short squeeze occurs when the price of a heavily shorted asset rises sharply, forcing short sellers to close their positions, further driving up the price. Therefore, potential short squeeze signals are closely monitored by investors.
BNB and TON Signal Upward Movement
Since April 9, the altcoin market has been following Bitcoin (BTC) in a downward trend. Currently, Bitcoin is trading at $61,405 and is below the 30-day exponential moving average (30-EMA). The 30-EMA is acting as resistance against the price of the largest cryptocurrency. Bitcoin’s price is also trapped between the 30-EMA and the psychological support level of $60,000, indicating a period of low volatility. This quiet period is expected to end with a significant upward price movement that could trigger a short squeeze for some altcoins.
The first potential candidate for a short squeeze is BNB Chain’s mainnet asset BNB. BNB shows various signs of a potential short squeeze. It currently holds the seventh-largest open interest in the market and the second-highest negative funding rate. Short sellers are paying long position investors an annual percentage rate (APR) of 64% due to the prevalence of short positions. This situation makes a short squeeze likely, potentially driving BNB’s price to a significant liquidation pool around $610 per token. For investors entering at current prices, this could result in approximately a 5% gain.
Toncoin’s mainnet asset TON also stands out as a potential short squeeze candidate. Primarily due to an excessively negative funding rate of 111.95%, the worst among crypto derivatives, it signals strong indicators for a short squeeze. Although its open interest is lower than BNB’s, the severe negative funding rate suggests that a reversal in the downtrend could trigger a short squeeze. TON currently has two notable liquidity pools for short position liquidations at $7.2 and $7.4 per token. Currently trading at $6.7, TON could rise by 10% in a short squeeze.
Potential Risks
Despite indicators pointing to a possible short squeeze for BNB and TON, investors remain cautious. As is well known, the cryptocurrency market is highly volatile, and other factors could prevent the anticipated trend reversals. Leveraged positions, in particular, carry significant risks, and investors need to manage these risks effectively.
In summary, the current market conditions and specific indicators for BNB and TON suggest that these altcoins may soon experience a short squeeze. High open interest volumes, negative funding rates, and accumulated liquidations create a conducive environment for such a scenario.
