Two Cryptocurrencies Show Escalation Potential Amid Short Squeeze Alert
Short Squeeze Alert: Top Cryptocurrencies Poised for Massive Growth Next Week
The cryptocurrency market has been trading sideways in the past week as traders seek insight into its next direction. Nevertheless, the short-selling open interest remains unbalanced for two cryptocurrencies that could experience a short squeeze next week.
When cryptocurrency traders open short positions
They provide collateral and agree upon a liquidation price above the position's opening. If the underlying asset's index price reaches this target, the exchange forcefully closes the position and liquidates the collateral.
Furthermore, derivatives exchanges set a funding rate according to the long/short ratio
To keep the market balanced. Short sellers must pay a funding rate interest to long-position traders if there are too many short positions. This also threatens liquidation, as the collateral is drained within the usually 8-hour interest payment.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.