Over 70% of altcoins currently have more long than short positions, revealing an imbalanced sentiment across the market.
High Long/Short Ratios paired with low RSI values could set up conditions for short squeezes and abrupt price recoveries.
Historical patterns show extreme long positions often coincide with market bottoms, increasing short-term price rebound probabilities.
Over 70% of altcoins currently show more traders in long positions than in shorts, making the crypto market harder to navigate. This imbalance suggests a cautious market state, where directional conviction appears strained across major assets.
Elevated Long/Short Ratios Shape Market Behavior
According to market observer Joao Wedson, the majority of altcoins are now experiencing a higher Long/Short Ratio. This metric compares the number of traders betting on price increases versus those expecting a decline. A ratio above 1 indicates more traders are positioned long.
Wedson’s analysis shows that this elevated ratio spans across altcoins ranked by market capitalization. The Y-axis of his chart shows the Long/Short Ratio, while the X-axis displays market cap rank. The color coding for total market cap is to point out the 24-hour RSI (Relative Strength Index) to identify overbought or oversold.
Historically, when long is too predominant, there will be a rebalancing in the market which usually means moving towards shorts, resulting in quick and sustained upward price movement, especially during a short squeeze.
Short Squeeze Conditions Are Taking Shape
Wedson emphasizes that increased long liquidations can act as the key trigger for a short squeeze. When heavily long positions are unwound suddenly, short sellers rush to cover positions, pushing prices up quickly. This can temporarily revive market momentum.
His experience suggests that extreme long positioning often signals potential bottoms. In contrast, extreme short setups frequently occur near price peaks. Traders observing liquidation levels and sentiment swings can gain valuable insights from this historical behavior.
Such setups can encourage cautious optimism among technical traders. However, they require close monitoring due to the volatility they introduce to price action.
RSI Patterns Support Broader Context
Wedson’s shared chart includes color-coded RSI data, adding a further dimension to market readings. RSI is a common momentum indicator used to assess whether assets are overbought or oversold within short time frames.
When combined with Long/Short Ratio readings, RSI patterns may enhance timing strategies. Altcoins sitting at RSI extremes, especially when paired with high long positions, become critical assets to watch. They may be the first to experience a squeeze or correction, depending on sentiment shifts.
Understanding these dynamics helps explain current trading challenges and offers data-driven scenarios for the days ahead.
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