The on-chain analytics platform, Santiment, has identified a key factor that could potentially drive the prices of Cardano (ADA) and XRP higher. Despite experiencing relief pumps following a recent decline in the crypto market, many market traders remain skeptical about these moves, viewing them as temporary fluctuations rather than signs of a bullish reversal. Santiment’s analysis suggests that the heavy shorting activity observed in both Cardano and XRP could actually serve as “rocket fuel” for further price increases in these tokens. The platform pointed out that these two altcoins are among the most heavily shorted in the market, making them potential candidates for a short squeeze that could propel their prices upwards.
Cardano and XRP have been consistently underperforming compared to other major cryptocurrencies this year, failing to experience significant relief pumps even when Bitcoin and the broader market show signs of recovery. Given their lackluster performance and bearish sentiment surrounding them, it is not surprising that they have attracted a high level of short interest from traders. However, the recent price recovery in Cardano and XRP, while other altcoins lag behind, could indicate a shift in market dynamics. If the theory proposed by Santiment proves to be correct, we may see a significant short squeeze in these tokens, leading to further price appreciation.
Recent data from Coinglass confirms that the short squeeze scenario may already be playing out in Cardano and XRP. Traders holding short positions in Cardano and XRP have incurred substantial losses in the last 24 hours, with over $50,000 and $30,000 in short positions liquidated for Cardano and XRP respectively. On the other hand, long positions in these tokens remain unaffected, suggesting a one-sided market sentiment favoring the bulls. This could indicate that the liquidation of short positions is fueling the current price increases in Cardano and XRP, potentially leading to a sustained upward trend.
Crypto analyst Egrag Crypto has made a bold prediction regarding the future price movement of XRP, foreseeing a potential price pump of up to 1,700% starting in July. He referenced a historical hammer formation pattern in XRP’s price chart between 2016 and 2017, which preceded a major price rally in the crypto token. According to Egrag, if XRP manages to close the 3-month candle above the range of $0.55 to $0.58 within the next 10 days, it could signal the beginning of a significant price rally. The analyst suggested that XRP could reach as high as $8 in the short term if the bullish pattern holds. However, if the price action resembles the pattern seen in 2017, XRP holders may have to wait longer for a more substantial price increase, potentially up to 5,500%, sending XRP’s price soaring to $27.
The current shorting activity in Cardano and XRP presents an interesting opportunity for traders and investors to capitalize on a potential short squeeze scenario. If market dynamics continue to favor the bulls and short positions are liquidated at a rapid pace, we could witness a sustained uptrend in the prices of these tokens. Additionally, the bullish predictions for XRP highlight the potential for significant price appreciation in the coming months, depending on its ability to break key resistance levels and sustain bullish momentum. As always, it is important for market participants to conduct their own research and risk assessment before making investment decisions in the volatile cryptocurrency market.
