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After an incredible decline in cryptocurrencies, there has been some recovery, creating a calm atmosphere in the market. Nevertheless, price movements in altcoins continue to be of great interest to investors.
Filecoin and Market Status
A short squeeze occurs when investors betting on a market decline dominate the market, take short positions, and provide high liquidity for upward movements. The liquidation of these positions can lead to a price increase and further liquidations can cause more upward movement.
Especially by the middle of this week, it seems that there are not many cryptocurrencies left that are likely to encounter a squeeze situation. Considering this, Filecoin (FIL) appears to be one of the most suitable candidates for such a scenario.
On the other hand, the king of meme coins, Dogecoin (DOGE), tops the list in terms of fitting the described scenario over a broader time frame. However, it is important to understand that the broader the time frame, the easier it is for the scenario to change.
Looking at the 3-day and weekly heat maps provided by CoinGlass, Filecoin stands out as the only cryptocurrency with significant open interest in short positions. Collecting liquidity at these levels could raise FIL to $5.5 this week, bringing about a roughly 4% gain from its current price of $5.29.
Current Status and Expectations for Dogecoin (DOGE)
On the other hand, Dogecoin, the king of meme coins, seems to have gathered enough open interest in short positions to potentially experience a short squeeze in February. Particularly, when examining this situation, it seems that the liquidity pool is targeting the $0.0948 level for the cryptocurrency on a monthly time frame.
This could be interpreted as a potential 17% increase for the king of meme coins and may catch investors with a bearish outlook on DOGE off guard.
Moreover, in the analysis of Dogecoin on a shorter time frame, traders leaning towards long positions are already liquidating investors with short positions through price increases, which could create the liquidity needed by investors before a more definitive rise.
