Indicators suggest BNB and TON could face a short squeeze
BNB and TON signal upward movement
Since April 9, the altcoin market has been following the downtrend of Bitcoin (BTC). Currently, Bitcoin is trading at $61,405, below the 30-day exponential moving average (30-EMA). The 30-EMA acts as resistance for 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 period of calm is expected to end with a significant price increase, which could trigger a short squeeze for some altcoins.
The first potential short squeeze candidate is BNB, the mainnet asset of BNB Chain. BNB shows various signs of a potential short squeeze. Currently, it has the seventh-largest open interest in the market and the second-highest negative funding rate. As short positions are prevalent, short sellers pay long position investors an annual percentage rate (APR) of 64%. This situation could lead to a short squeeze, potentially pushing BNB's price to a significant liquidation pool of around $610 per token. For investors who enter at current prices, this could result in a gain of about 5%.
Toncoin's mainnet asset TON has also become a potential short squeeze candidate. Mainly due to the excessively negative funding rate of 111.95%, the worst among cryptocurrency derivatives, which indicates strong signs of a short squeeze. Although its open interest is lower than BNB, the severe negative funding rate indicates that a reversal of the downward trend may trigger a short squeeze. TON currently has two well-known short position liquidation liquidity pools, 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 that BNB and TON may see a short squeeze, investors remain cautious. As we all know, the cryptocurrency market is highly volatile, and other factors may prevent the expected trend reversal. Especially for leveraged positions, there are 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, negative funding rates, and accumulated liquidations create a favorable environment for this scenario.
