Earlier today, crypto analytics platform Santiment tweeted an observation that Axie Infinity (AXS) and Bitcoin Cash (BCH) stand out as two of the very few crypto assets seeing more shorts than longs this weekend:
“AxieInfinity and BitcoinCash are among the very slim group of crypto assets that are seeing a higher ratio of shorts than longs this weekend. Traders appear to be confident of a market bounce upcoming, and $BCH & $AXS are two exceptions.”
This is significant because most other major cryptocurrencies are seeing the opposite – more long positions opened by traders expecting prices to rise. As Santiment notes, there seems to be broader confidence across crypto markets this weekend. Yet traders are bucking the trend and betting against price rises for both AXS and BCH specifically.
When shorts get liquidated – meaning these bearish bets get closed at a loss due to market moves against them – it can accelerate gains like “rocket fuel.” The highly-shorted coins AXS and BCH could see just such short squeezes if prices start bouncing off local lows.
The contrarian shorting against these altcoins likely comes from longer-term bearishness, even as AXS is down 15% and BCH is up 100% over the past year. Other altcoins with massive previous gains like ADA, SOL, AVAX or LINK have seen much larger drawdowns. Traders seem focused on expecting further declines or consolidation for AXS and BCH rather than any belief in a sustainable bounce.
It will be fascinating to watch if these coins see short covering rallies even while broader sentiment remains cautious. Savvy traders might try to profit from the squeezed shorts if quick upside does emerge. But the broader macro backdrop likely remains too weak for most to call serious bottoms in AXS and BCH yet. The short sellers might still have the right long-term idea.
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