The cryptocurrency market has experienced a reversal in its downward trend towards the end of the week, thanks to the release of non-farm employment data on May 3. After a period of pessimism and short-selling, some cryptocurrencies are now showing potential for significant price increases due to short selling.
Current State of the Crypto Market
The total crypto market value index has seen a price increase of more than $277 billion since hitting a low point on May 1. In just three days, the index has risen by over 13%, reaching a peak of $2.318 trillion on May 4.
However, the fear, uncertainty, and doubt (FUD) that was prevalent in the market has led many investors to engage in short selling of Bitcoin (BTC) and other cryptocurrencies. As a result, the likelihood of short selling events for BTC has increased, which could ultimately drive prices higher.
On the other hand, two cryptocurrencies have experienced significant liquidations due to negative funding rates and accumulated short positions.
BNB Chain (BNB) Outlook
The current funding rate of BNB Chain (BNB), the native token of the Binance exchange, is capturing attention as a potential indicator of a short squeeze. CoinGlass’s 30-day funding rate heat map as of May 4 confirms this.
In particular, those who have engaged in short selling of BNB are now paying a 32.63% annual percentage rate (APR) to investors who have taken long positions. This payment could potentially lead to the end of these short positions. Data suggests that BNB has the sixth largest open interest in the derivatives market.
When looking at price targets, liquidity pools for short positions on BNB are observed between $600 and $630, while the current trading price is $588.
Will Bitcoin Cash (BCH) Rise?
Bitcoin Cash (BCH) is displaying a higher negative funding rate of 35.96% and ranks among the top 10 cryptocurrencies in terms of open interest.
While the liquidity pools for BCH are not as intense as those for BNB, there are still regions indicating significant liquidation between $500 and over $700. This suggests that a short squeeze on the Bitcoin Cash side could lead to movements resulting in gains of over 40%.
Disclaimer:
This article does not provide investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry significant risks. It is important for individuals to conduct their own research before making any investment decisions.
