Increased Shorting Activity May Soon Lead To Liquidations: Report

• Santiment tweeted yesterday that traders are actively shorting cryptocurrencies.
• The firm predicted that this increased shorting activity may lead to a wave of liquidations soon.
• At press time, the cryptocurrency market cap stood at $1.107 trillion after it dropped 1.5% over the past 24 hours.

Santiment, the blockchain intelligence firm, revealed in a tweet yesterday that traders are shorting the cryptocurrency market as the market capitalizations of many digital assets continue to decline. Despite this, the firm predicted that the likelihood of liquidations against traders betting against the market will rise, which will be an overall bullish indication.

According to the post, the current short funding rates in the market indicate a high level of fear, uncertainty, and doubt (FUD), which increases the chances of prices rising. Should this happen, traders who created short positions will be liquidated.

Meanwhile, The global cryptocurrency market cap (TOTAL) took a somewhat steep dive over the past 24 hours and dropped more than 1.5% during this period. Consequently, the total stood at around $1.107 trillion at press time.

From a technical standpoint, within the last 48 hours, the total value has fallen beneath the critical support level of $1.115 trillion. This occurrence followed TOTAL’s unsuccessful attempt to breach the resistance at $1.15 trillion on Monday.

As a consequence, the overall market capitalization for cryptocurrencies has undergone a pronounced downturn. Notably, the most significant decrease during this period unfolded yesterday, resulting in a 1.43% decline for TOTAL and culminating in the breach of the $1.115 trillion support threshold.

Given the recent activation of a substantial short-term bearish technical signal, there is a likelihood that the cryptocurrency market cap could continue to diminish over the upcoming 24-48 hours. This signal was triggered when the 20-day Exponential Moving Average (EMA) line crossed beneath the 50-day EMA line within the preceding 48 hours.

This alignment implies that the current advantage lies with the bearish sentiment, potentially maintaining a force of selling pressure on the market. Should this technical indication prove accurate, it is feasible that the collective market capitalization of the cryptocurrency sector might decrease to around $1.08 trillion within the following few days.

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