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13/09/24
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Market Shake-Up: Santiment Identifies Three Altcoins Likely to Surge Amid Heavy Shorting
The on-chain analytics firm Santiment has highlighted three altcoins that may experience significant price movements soon. Currently, these cryptocurrencies are under heavy shorting on Binance, raising questions about investor sentiment and market dynamics.
Santiment’s analysis focuses on the Binance Funding Rate, which indicates the fees traders are paying each other on the derivatives exchange. A positive funding rate suggests long investors are paying fees to short holders, reflecting a predominantly bullish sentiment among traders. Conversely, a negative rate indicates a bearish outlook, where short positions are favored over longs.
Recently, the funding rate for Aave (AAVE), The Graph (GRT), and Decentraland (MANA) has shifted from positive to negative, suggesting a surge in short positions among investors. This change comes even as the overall cryptocurrency market rebounds, propelled by Bitcoin’s recovery above $58,000. The increased shorting of these altcoins contrasts with the general market trend, reflecting a certain skepticism among derivatives traders about the futures of AAVE, GRT, and MANA.
However, this bearish positioning may set the stage for potential price surges. When short positions reach a critical mass, it raises the likelihood of mass liquidation events, which can dramatically impact prices. When large liquidations occur, often referred to as a “squeeze,” it can lead to sudden price spikes as the market reacts to the buying pressure generated by closing out of short positions.
The outlook for Aave appears optimistic in light of recent movement, as its price has climbed to $147, representing an 11% increase over the past week. Whether Aave and similar cryptocurrencies will continue this upward trajectory remains to be seen, particularly as investors betting on a bearish market may soon face the repercussions of their positions.
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