The post Will the Injective Token Price Rally Trigger a Short Squeeze? appeared on BitcoinEthereumNews.com.

Injective’s recent community vote to reduce INJ’s supply has sparked a rally in the altcoin’s value. Trading at $26.29 at press time, its price has surged 33% over the past week. Despite this rally, INJ futures traders have placed short bets against its price. However, with the token poised to extend its gains, these short traders risk facing a potential short squeeze. Injective’s Transition Boosts Market Interest  On January 5, a governance proposal to transition from Injective 2.0 to Injective 3.0 was approved, with 99.99% of community members voting in favor. This upgrade will reduce the supply of INJ tokens, making it “one of the most deflationary assets over time.” The positive hype around this upgrade is currently driving the INJ price rally, whose value has risen by 18% in the past two days. Interestingly, despite this, the token’s futures traders remain unimpressed and have continued to demand more short positions. This is reflected by INJ’s Long/Short Ratio, which is 0.99 at press time. Injective Long/Short Ratio. Source: Coinglass This ratio compares the number of long positions (bets that the price will rise) to short positions (bets that the price will fall) in a market. When the ratio is below 1, it indicates that there are more short positions than long positions, suggesting a bearish sentiment among traders. Rising Demand for INJ Puts Short Traders at Risk   However, with growing demand for INJ, these traders are at risk of a potential short squeeze. A short squeeze occurs when a shorted asset experiences a price increase, forcing short sellers to buy back their positions to limit losses. This buying pressure can drive the price even higher, creating a feedback loop that accelerates the upward trend. INJ’s rising Relative Strength Index (RSI) is worthy of note here. At press time, this momentum…

---

Filed under: News - @ January 7, 2025 1:22 pm