7 Short Squeeze Cryptocurrencies That Could Take Off In December

All 7 have a high percentage of traders net shot, but prices are on the rise

Last Updated December 20th 2021

14 Min Read

These cryptos are primed for short squeezes.

A short squeeze is when the market goes against short sellers, forcing them to buy the underlying asset. This adds to the already building up bullish momentum, triggering a rally.

Short squeezes are quite common in the crypto market and usually happen when leveraged retail traders expect the price to drop for whatever reason, but it fails.

At the moment, several cryptos have a high percentage of short traders. That’s despite the market showing signs of a bullish reversal in the last 48-hours. This means a short squeeze could be underway.

To help you take advantage if it happens, here are 7 cryptos that have the ingredients to be the next major short squeeze cryptocurrencies.

Short Squeeze Cryptocurrencies That Could Take Off In December

Dogecoin (DOGE)
Solana (SOL)
Ripple (XRP)
Polkadot (DOT)
Litecoin (LTC)
Sandbox (SAND)
Axie Infinity (AXS)

Dogecoin (DOGE)

Dogecoin (DOGE) is in the middle of a short squeeze, which could trigger a bull run in 2022. Throughout the first two weeks of December, shorts have made up the largest percentage of traders across multiple exchanges.

However, things started to change on December 12th when Dogecoin started to spike and saw many short positions get liquidated around the $0.20 level. While the price has dipped a little since anyone short Dogecoin at $0.185 and above is in the red.

A lot more Dogecoin shorts are likely to be squeezed out in the future. That’s because the Tesla news and the news in 2022 are not in favour of a bearish Dogecoin.

Within December, news of Tesla accepting Dogecoin in selling some merchandise will keep drawing in more buyers into the market. Interestingly, the long-short ratio is still in favour of short-sellers. As of December 14th, 2021, Dogecoin short-sellers accounted for 50.52% of the trades on major exchanges. This is a perfect setup for a short-squeeze.

There is also the fact that in Q1 of 2022, Dogecoin has some even bigger news coming up. The upcoming news is related to SpaceX and the use of Dogecoin to fund a lunar mission. The mission has the backing of Elon Musk, and if recent Musk-inspired Dogecoin pumps are anything to go by, then Dogecoin could be up for a pump in Q1 of 2022. This could further squeeze out the shorts and feed into the rally.

Another potential Dogecoin short squeeze indicator is that Dogecoin is trading at a major long-term support level. There is a major multi-month resistance around the $0.17 level. It was shortly breached in the recent market-wide selloff, but the price has since bounced back above $0.17.

In essence, there is a perfect confluence of positive news about Dogecoin, the price trading at a long-term support level, and many enthusiastic short sellers. This is an ideal setup for a short squeeze, and if it happens, the forced short liquidations could push Dogecoin back to its all-time highs.

The broader cryptocurrency market is turning a corner, too, after the selloff in the first week of December. This, too, could fuel a Dogecoin rally and play a role in squeezing out the shorts.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Solana (SOL)

Solana (SOL) has taken a hit recently, and on December 15th, SOL pushed through a major long-term support at $164.26. This created the perception that Solana would crash even further and saw it draw in more short sellers.

As of December 13th, the number of Solana short-sellers had shot up. The percentage of short sellers stood at 50.5% and was rising.

Source: Coinglass

The rising bearish expectations around Solana are a combination of a DDoS attack on the Solana network and the broader cryptocurrency market that has been bearish for the better part of December.

However, both of these factors are turning against bears, and a short squeeze is already in progress for Solana. On December 16th, 2021, Solana rallied back through the $164.26 multi-month support and tested highs of $182.71. Essentially, anyone who was short on Solana is being liquidated.

Source: TradingView

With 50.5% of traders still short on Solana, there is a good chance that the price will keep going up as more shorts get liquidated in the $190 to $200 price range.

Solana could easily make new highs if current momentum sustains within December 2021. A couple of factors could push Solana higher even after the shorts have been squeezed out.

The first one is Solana’s usability. Despite the Solana network's attacks recently, it still remains one of the best blockchains for use in launching Dapps. That’s because it is low-cost, and its transactions are amongst the fastest in cryptocurrency.

Secondly, Solana seems to have easily waded off two attacks within the last quarter of 2021. Solana will become more decentralized as the network gets bigger and more validators to join in, making it even harder to attack. This means confidence in the Solana network is only set to go up over time.

Last but not least, the broader cryptocurrency market is regaining bullish momentum. After the selloff in the first week of December, the overall crypto market seems to have overcome the worst.

On December 16th, 2021, the total cryptocurrency market capitalization shot up by 3.27% to hit a high of $2.28 trillion. This is likely to fuel Solana’s rally since FOMO is likely to kick in as the price goes up.

All the above factors make Solana (SOL) one of the best short squeeze cryptocurrencies that could take off in December.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Ripple (XRP)

Ripple XRP has had a consistently high number of short sellers all through December. From December 4th, 2021 to December 14th, the number of XRP short sellers has remained above 50% across exchanges.

Source: Coinglass

There is a rational reason why a lot of traders are short on XRP at the moment. Firstly, is the case between Ripple and the SEC that has dragged on for the last two years. As long as this lawsuit keeps hanging like a dark cloud above Ripple, investors expect XRP to keep underperforming the broader market.

At the same time, the cryptocurrency market has been bearish for the better of December. This has increased trader expectations that XRP could trade in the red all through December.

However, these same factors make XRP prime for a short squeeze. Based on analysts’ analysis of the ongoing case between Ripple and the SEC, there is a good chance that Ripple could win the case.

If the case turns out in Ripple’s favour in 2022, a rally could follow, and squeeze out the shorts. Such a situation has come up multiple times within 2021. A couple of times, even tiny aspects of the case have come out in Ripple’s favour and sent the price rocketing.

But even in the very short-term, within December 2021, XRP is prime for a short squeeze. That’s because, despite the woes that Ripple is going through, XRP pretty much moves in tandem with the broader market.

Source: TradingView

At the moment, the broader cryptocurrency market is turning bullish after weeks in the red. A few major altcoins such as Polygon (MATIC), and Solana (SOL) are already pumping by double digits.

Bitcoin, too, is close to retesting $50k. If Bitcoin pushes through the $51k resistance within the month, then chances are that it could rally back to $60k. It could uplift the entire market within the month in such a scenario. This would mean a pump for XRP as well.

Considering that a lot of investors are short XRP at the moment, an increase in buying momentum could see short sellers get liquidated en masse, and in the process act as fuel for a short-term XRP rally.

For the huge upside breakout that XRP has at the moment, it is without a doubt one of the best short squeeze cryptocurrencies that could takeoff within December.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Polkadot (DOT)

As of December 14th, 2021, Polkadot (DOT) shorts across major exchanges stood at 51.89%. This is an indicator that most traders expect Polkadot to be in the red all through December and possibly into 2022.

Source: Coinglass

However, if current market conditions are anything to go by, there is a good chance that Polkadot bears are about to be squeezed out.

One of the factors that could trigger a Polkadot short squeeze is the increased bullish momentum in the entire crypto market. Like most major altcoins, Polkadot trades in the overall direction of Bitcoin (BTC), and things are looking increasingly good for Bitcoin.

After the crash in early December 2021, Bitcoin has started regaining upside momentum and is now retesting the $50k mark. In the process, BTC has uplifted the entire market, including Polkadot.

This is already evident in the price action of Polkadot. Since it hit a low of $24.01 on December 15th, Polkadot has been in a strong rebound. By December 16th, Polkadot was trading at $27 and gaining.

Source: TradingView

As Polkadot gains in value, bears are starting to feel the heat. Since the $27.66 price level is a major weekly resistance level for DOT, a lot of short positions are within this price level. In essence, if bulls, driven by broader market momentum, blow through this resistance, many bears will be squeezed out. Buying volumes are rising around this resistance, an indicator that a short squeeze is imminent.

Besides being driven up by Bitcoin’s growing upside momentum, Polkadot’s core fundamentals make it potentially bullish both in the short and the long run. For starters, there is a lot of optimism around Ethereum and its wider ecosystem going into 2022. Polkadot is part of this ecosystem because it can be used to launch highly scalable Dapps that are interoperable with the Ethereum blockchain. This makes it one of the most bullish cryptocurrencies going into 2022.

Polkadot also does not have the security issues that many of the upcoming platform blockchains are facing. Most of the highly scalable platform blockchains in the market today achieve breakneck speeds at the expense of decentralization. This makes them vulnerable to attacks. Polkadot does not have these problems because it uses parachains.

Since all Polkadot parachains are secured by the same validators, who are anyone who owns DOT and can run a node, Polkadot will never face the risk of a networking-collapsing attack due to node centralization.

Polkadot’s ease of use thanks to its substrate framework makes it attractive for many people looking to launch a Dapp.

Essentially, the fundamentals are right for a Polkadot rally. Couple this with an increasingly bullish BTC and a high short to long ratio, and you have the perfect conditions for a short squeeze.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Litecoin (LTC)

Litecoin (LTC) has underperformed the broader cryptocurrency market this year. While most cryptocurrencies made new highs in May 2021, Litecoin did not retest its 2017 highs.

In the early December 2021 crypto market crash, Litecoin crashed hard too, and on December 15th, it tested lows of $143.

Source: Coinglass

Litecoin’s price action in 2021 has created the impression that its best days are behind it. This is evident in the high amount of Litecoin shorts all through December. As of December 14th, the number of traders short Litecoin on major exchanges stood at 50.1%.

While Litecoin’s market underperformance is a reason for many traders to go short, there is every indication that short sellers are about to be squeezed. In fact, on December 16th, a lot of Litecoin short-sellers had already been squeezed out.

On December 16th, 2021, Litecoin shot up from lows of $142.01 to a high of $155.07 in a matter of hours. This means anyone who was short at $142 targeting lows below $100 got liquidated.

Source: TradingView

Litecoin is currently trading at a multi-week resistance at $156.29. With the percentage of shorts still above 50%, it means that a lot of traders have short positions around the $156.29 resistance level.

If Litecoin pushes through the $156.29 resistance within the month, a short squeeze could follow. Forced short liquidations could see Litecoin trade above $250 within December.

A potential Litecoin short squeeze above the $156.29 price level has a basis in the broader market price action. While Litecoin has underperformed most major cryptos in 2021, it generally trades in the overall direction of the cryptocurrency market.

Its pump on December 16th, 2021, underscores LTC’s correlation to BTC and the broader market. At the moment, Bitcoin bulls are taking control, and Bitcoin is now close to breaking the $50k - $51k resistance. If Bitcoin pushes through the $51k resistance, then chances are that Litecoin and the rest of the market could rally as well.

In essence, if you are hunting for short squeeze cryptocurrencies to buy in December, Litecoin is a prime candidate to keep an eye on over the coming weeks. A short squeeze could trigger a rally that finally pushes Litecoin through its 2017 highs at some point in 2022.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Sandbox (SAND)

Sandbox (SAND) has been one of the best crypto performers of the last few months. In November, SAND rallied by more than 100%. Interestingly, the number of SAND shorts has remained consistently high all through December 2021. As of December 14th, 2021, the percentage of Sandbox shorts stood at 51.82%.

Source: Coinglass

This is an indicator that a majority of traders expect SAND to underperform all through December. There are a number of factors that have contributed to the increased bearish outlook for SAND.

Firstly, after a more than 100% rally in November, traders expect profit taking to put brakes on SAND’s upside momentum. Then there is the fact that the entire cryptocurrency market has been in a correction for the better part of December. Short sellers expect the bearish momentum in the broader cryptocurrency market to put pressure on SAND.

However, if SAND price action on December 16th is anything to go by, then short-sellers are about to get squeezed. Within 24-hours, SAND rallied by over 14% and eliminated most of the losses that it had made since December 13th. SAND’s price action has put pressure on bears, as anyone who went short at $4.43 is in losses, or has been liquidated.

Source: TradingView

At the moment, Sandbox is trading around the $5.31 weekly resistance. Considering that the percentage of SAND shorts is still higher than longs, it means that there are lots of short-sellers around $5.31 resistance.

If by any chance Sandbox gains more upside momentum and rallies through the $5.31 resistance, these shorts would be liquidated. This could fuel SAND into another rally that could see it retest its recent all-time highs.

There are a couple of factors that could trigger a SAND short squeeze. The biggest one is rising upside momentum in the broader crypto market. After a selloff in the first two weeks of December, the entire cryptocurrency market is in the green.

SAND is one of the tokens that have gained at a higher rate than the rest of the market. This is an indicator that if the market remains bullish, SAND could blow past the $5.31 resistance within December.

SAND also has a lot of excitement around it after launching a play-to-earn game called Alpha. This game will drive the demand for SAND and put upside pressure on the price.

These factors put SAND among the top short squeeze cryptocurrencies that could take off in December.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Axie Infinity (AXS)

Axie Infinity (AXS) has had a stellar performance in 2021. However, all through December, traders seem to believe that Axie is up for a correction. This is evident in the consistently high number of short-sellers throughout the month.

As of December 14th, 2021, 51.52% of traders across exchanges were net shot on Axie Infinity.

Source: Coinglass

The high short ratio can be attributed to profit-taking and the cryptocurrency market has been sluggish all through the first two weeks of December.

Axie Infinity is up by 13,400% year-to-date, and it was only a matter of time before profit-taking led to a short-term correction.

However, with the crypto market gaining upside momentum again, short-sellers are likely to take a hit for the remainder of December 2021. This is already evident in the price action of Axie Infinity on December 15th, 2021, when AXS rallied from a low of $91.89 to a high of $103.87.

Axie Infinity is currently trading around the $102.90 weekly resistance level. If AXS rallies through this resistance in the remaining part of December, then short positions around $102 to $103 could be squeezed out, triggering a rally in the value of AXS.

Source: TradingView

Two key factors are likely to trigger an AXS rally through the $102 to $103 resistance range. One of them is that Axie Infinity’s fundamentals are right. The Metaverse space is growing fast, and Axie Infinity, one of the largest in this market, is getting a lot of attention lately. This means that it is likely to keep going up in the foreseeable future.

At the same time, the broader cryptocurrency market looks strong despite the recent correction. For instance, while there is a lot of downside pressure on the market, Bitcoin is holding steadily above its recent low of $47k. AXS and a host of other cryptocurrencies are also showing a lot of promise.

This means a bullish breakout within December is possible and we could see AXS shorts get squeezed out in the ensuing rally.