A reversal in the downward trend of the cryptocurrency market has been observed in the final days of the week, following the release of non-farm employment data on May 3. After a period of dominant short-selling sentiment, certain cryptocurrencies are now displaying potential for significant price increases as a result of short selling.
Current State of the Crypto Market
The total crypto market value index has shown a price increase of more than $277 billion from the local bottom on May 1 up until now. In just three days, the index has risen by over 13%, reaching a peak of $2.318 trillion on May 4.
However, previous fear, uncertainty, and doubt (FUD) have led many investors in cryptocurrency transactions to short Bitcoin (BTC) and other cryptocurrencies. As mentioned in recent days, this increase in short selling events on the BTC side could 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 attracting attention as an initial indicator of a potential short squeeze. This is evident from the 30-day funding rate heat map from CoinGlass as of May 4.
In particular, those who have shorted BNB are paying a 32.63% APR to investors who have taken long positions, which could lead to the closure of these short positions. Data on the BNB token reveals that it has the sixth largest open interest in the derivatives market.
When considering price targets, liquidity pools for short positions on BNB are located between $600 and $630, whereas 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.
Although the liquidity pools for BCH are not as intense as those on the BNB side, there are significant regions indicating prices between $500 and over $700. This suggests that a short squeeze on the Bitcoin Cash side could result in gains of over 40%.
Disclaimer:
The information provided in this article should not be considered as investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and should conduct their own research.
