The cryptocurrency market has started to recover with the Bitcoin halving after a sharp sell-off. Crypto analyst Vinicius Barbosa says that two cryptocurrencies that are among the highest open positions in the market currently have negative funding rates. The analyst says this potentially means a buy signal.

These 2 cryptocurrencies give a buy signal!

Negative funding rates mean that short sellers have to pay interest to long traders as long as they keep their short positions open. Therefore, it is possible that these traders face liquidation through ‘short squeeze’. Or they could be forced to close their positions, potentially affecting prices.

CoinGlass’ April 23rd funding rate heatmap provides some insights. Sorting the chart by the cryptocurrencies with the highest open interest (OI), two cryptocurrencies stand out. These also signal a potential buy signal.

Bitcoin Cash (BCH) has ‘short squeeze’ potential

Bitcoin Cash (BCH) ranks as the seventh largest cryptocurrency by open interest. The popular Bitcoin (BTC) rival has a market capitalization of $10 billion while having open interest of around $337 million. As for funding rates, BCH has the most significant negative APR among the top 10 cryptocurrencies by OI. With a negative 10.61% funding rate, short sellers are likely to be under pressure to close their positions.

Funding Rate Heatmap. 30-day chart by Open Interest Rate (OI). Source: CoinGlass

Bitcoin Cash has seen a surge in upside liquidity pools due to leveraged liquidation accumulations. This triggered a ‘short squeeze’ warning for this week. So far, BCH has yet to experience a ‘short squeeze’. This has increased the potential of the above negative funding rates buy signal. At press time, BCH was trading at $510. However, the cryptocurrency has the potential to rise above $700.

BCH Liquidation Heatmap, 1-month chart, BCH. Source: CoinGlass

Celestia (TIA) in second place

The next buy signal comes from Celestia with the most favorable negative funding rates, around 24% APR. TIA ranks 27th by open interest. However, unlike Bitcoin Cash, TIA has a neutral liquidation heatmap, which weakens the buy signal even with the observed high funding rate. Meanwhile, earlier, Celestia had issued a sell signal due to overbought conditions. This is a clear indication of how unpredictable the cryptocurrency market is.

Funding Rate Heatmap, 30-day chart based on Open Interest (OI), TIA. Source CoinGlass

The views and forecasts in the article are those of the analyst and are not investment advice. Cryptocoin.com we strongly recommend that you do your own research before investing.