Chiliz (CHZ), Fantom (FTM), and Cardano (ADA) price action signal potential for a price surge. Data from crypto behavior analytics firm Santiment, reveals a consistent pattern of short positions against these tokens over the past five weeks. This scenario sets the stage for potential price increases due to short liquidations, a phenomenon that has historically led to notable market movements.
Santiment noted that when altcoins are heavily shorted by traders, as seen with Chiliz, Fantom, and Cardano, there is an increased likelihood of price surges. This scenario occurs when funding rates on major exchanges enter negative territory, leading to potential liquidations that drive prices up.
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CHZ, FTM, and ADA Funding Rates and Historical Impact
Moreover, the chart from Santiment tracks the Binance funding rates for CHZ, FTM, and ADA. These rates are currently in the negative range, suggesting that many traders are betting against these assets.
Historically, similar scenarios have led to price surges following short liquidations. For instance, from mid-April to late May, CHZ rose by 32%, FTM by 49%, and ADA by 10% after being heavily shorted.
The current funding rates for CHZ, FTM, and ADA are again in the negative range. This situation indicates a potential short squeeze, where liquidations force traders to buy back the assets to cover their positions, driving prices up.
Consequently, these cryptocurrencies are poised for possible price boosts. This trend suggests a cyclical behavior where bearish sentiment sets up conditions for bullish reversals.
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Short Squeeze Potential and Market Sentiment
A large number of shorts being liquidated forces traders to buy back the asset to cover their positions. This action drives the price up significantly. CHZ, FTM, and ADA are currently poised for potential price boosts due to their negative funding rates.
The consistent shorting of these assets indicates bearish sentiment among traders. However, historical patterns show that such negative sentiment often precedes substantial upward movements when liquidations occur.
Santiment’s analysis highlights a potential price surge for Chiliz (CHZ), Fantom (FTM), and Cardano (ADA). The consistent short positions and negative funding rates set the stage for upward movements due to short liquidations.
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