Two cryptocurrencies that could soar

This week started with a $4,000 Bitcoin (BTC) rally, accruing 10% gains from the lowest to the highest price on January 8. Some cryptocurrencies followed the leader, which overperformed the cryptocurrency market, increasing its capitalization dominance to over 54%.

Nevertheless, some cryptocurrencies are laggards in this bull rally, still dominated by short positions, with remaining liquidity upwards. These higher-priced liquidity pools could become market makers’ targets, favoring short-squeeze liquidation events, potentially driving prices up.

Essentially, a short squeeze happens when short positions get massively liquidated. These liquidations force purchases of the given cryptocurrency, increasing the price and bringing new liquidations for even higher prices at a spiral event.

In particular, Finbold spotted XRP (XRP) and BNB Chain (BNB) as two cryptocurrencies to watch, based on data from CoinGlass on January 9.

Will XRP skyrocket with short liquidations?

Notably, XRP’s liquidation heatmap shows three higher liquidity pools in the 3-day time frame. They are at $0.583, $0.590, and $0.592, favoring a short squeeze to these prices.

However, it is important to understand that these are relatively low liquidity pools worth no more than $1,560 each. This is due to the significantly low volume of XRP in the derivatives market, which got worse in the last 24 hours, dropping 45%.

XRP is trading at $0.569 by press time, with only $577.09 million in short positions opened in the last 24 hours. The total daily volume is $1.04 billion, making short-sellers dominate by 51.82% of the short-term interest.

Short squeeze alert for BNB on January 9

In the meantime, BNB Chain’s native token is being massively shorted, with attractive liquidity pools upwards. There are three main short-squeeze price targets at $311.9, $312.4, and $313.3, all with more than $1 million worth of liquidations.

Interestingly, BNB is more likely to see a short squeeze than XRP due to its higher available liquidity. The token currently trades at $304.97, but the 24-hour volume is lower than the first token. BNB has $367.36 million short positions opened in the day, with 50.36% of the $705.9 million volume.

However, the low volume for both cryptocurrencies also means that this scenario could easily shift at any moment. If a significant volume for long positions surges in the market, liquidity could favor bulls’ liquidations and stop hunts, driving the price downwards.

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