Recently, opportunities for short squeezes in altcoins have been frequent. I developed a monitoring script using AI, and successfully captured $VOXEL last night. This article will elaborate on the strategy logic and guide how to write prompts to build a monitoring bot.
Currently, the cryptocurrency market is affected by uncertainties in macro tariff policies, leading to heightened risk aversion and insufficient liquidity in risk assets. Traders holding large amounts of altcoins are facing difficulties: it is hard to sell their positions in the spot market, where will the liquidity come from? The answer is the perpetual contract market! This provides us with an opportunity to dance with the traders.
I. Strategy Logic Derivation#
How do traders exit through the perpetual contract market? Here is a step-by-step reasoning:
1. Trader's Dilemma#
Holding a large amount of spot positions, but the market lacks liquidity; selling directly would lead to a price crash.
2. Perpetual Contract Solution#
Short sellers are forced to buy spot or contracts when they hit stop-loss or liquidation, providing liquidity to the traders.
3. Attracting Short Sellers#
Traders raise the spot price (affecting the mark price), inducing retail investors to short and take positions on the perpetual contracts.
4. Negative Funding Rate Bonus#
An increase in short positions leads to contract prices falling below spot prices, resulting in negative funding rates, allowing traders to profit from holding long positions and the price difference.
5. Exit Strategy#
Push the price to resistance levels or liquidation zones, forcing short sellers to cover their positions and buy, allowing traders to exit, or even reverse to short.
The core of this strategy is to utilize the "buying" behavior of short sellers to create liquidity for the traders.
II. Core Monitoring Indicators#
Observable changes in indicators throughout the process include:
Extreme negative funding rate (high control of spot by traders) -> Abnormal increase in OI (traders establishing long positions) -> Continuous breakthroughs of resistance levels (gaining more long liquidity to exit) -> Decrease in Long/Short Ratio (retail investors being stopped out or liquidated) -> Decrease in OI, funding rates returning to normal levels.
To capture short squeeze signals, the following key data must be monitored:
1. Extreme Negative Funding Rate#
A large negative value (e.g., <-0.1%) indicates high control of spot by traders, excessive participation of retail short sellers, and traders may be positioning long.
2. Surge in Open Interest (OI)#
A rapid increase in OI suggests that traders are accumulating positions by accepting retail short sellers' chips.
3. Breaking Resistance Levels#
Prices breaking through key points may trigger short liquidations.
4. Indicators Returning to Normal#
After short liquidations, the long-short ratio rises, OI falls back, and funding rates return to normal, indicating the end of the short squeeze.
Among these, abnormal changes in funding rates and open interest (OI) are leading indicators for capturing signals! They need to be closely monitored.
III. AI Prompt Core#
Is manual monitoring inefficient? Use AI and Python code to create automated tools that capture abnormal signals in real-time and push alerts via Telegram Bot. The implementation steps are as follows:
1. Data Snapshot Acquisition#
Obtain key data for the perpetual contract USDT trading pairs from the Binance exchange API, including:
- mark_price (mark price)
- index_price (index price)
- basis (basis)
- basis_percent (basis percentage)
- last_funding_rate (latest funding rate)
- oi (open interest)
- long_short_account_ratio (account long-short ratio)
- top_trader_account_ls_ratio (large account long-short ratio)
- top_trader_position_ls_ratio (large position long-short ratio)
- taker_buy_sell_ratio (taker buy-sell ratio)
(Note: If AI acquisition fails, refer to the official API documentation: https://developers.binance.com/docs/derivatives)
2. Scheduled Execution and Data Storage#
- Run the program every 5 minutes to obtain data for all USDT perpetual contract trading pairs.
- Save the data to data/{symbol}.csv files for subsequent analysis.
3. Abnormal Alert Logic#
Set custom trigger conditions:
When the absolute value of the funding rate > 0.1% (i.e., last_funding_rate < -0.001 or > 0.001), and the average OI of the last 3 instances / the average OI of the last 10 instances > 2 (indicating a short-term surge in OI), push alerts via Telegram Bot to notify potential short squeeze signals.
With the above prompts, you can build a bot to monitor short squeeze opportunities, and after obtaining signals, combine them with technical analysis to set take-profit and stop-loss levels. Such opportunities continue to exist, so deploy your bot as soon as possible!
Original @AI Soros Kote
OKX Activities This Month#
New users registering on OKX this month can receive blind boxes or Dogecoin gift packs. Users in China can register directly: Click here –> Go to the official website to register an OKX account, some regions may require a VPN or alternative link
🔥 Solving Access Issues to OKX Exchange in China#
Many exchanges' original domain names may be blacklisted, or access speed may be affected due to servers being located overseas. For ordinary users, this situation often leaves them feeling helpless, even doubting whether the exchange itself has issues. In fact, this is more about the network environment rather than a service interruption on the platform itself. To address this, exchanges like OKX and Binance typically update alternative domain names regularly to ensure users can continue accessing the official website through alternative addresses.
-
- OKX alternative domain Overseas OKX - requires VPN or alternative link
-
- Binance alternative domain Binance
-
- Bitget alternative domain Bitget
-
- Bybit alternative domain Bybit/Bybitglobal
-
- Huobi HTX alternative domain Huobi/HTX
-
- Gate.io alternative domain Gate.io
🔥 Related Reading#
🔥 Useful Tools for Finding Gold Dogs#
1️⃣ Axiom Dog-Charging Tool https://axiom.trade
2️⃣ Gmgn Dog-Charging Tool https://gmgn.ai
3️⃣ dbot Dog-Charging Tool https://app.debot.ai
4️⃣ Morelogin Multi-Account Fingerprint Browser www.morelogin.com
Everyone is Searching For#
AI robot monitoring, buying Bitcoin in China, depin small grass 挂机，how to receive small grass grass airdrop, trading exchanges, OKX download registration, domestic OKX recharge, Binance App registration, Binance App download, Binance platform buying currency tutorial, Binance registration, Binance airdrop registration, Binance iPhone download, how to buy presidential coins, how to buy Dogecoin, buying Bitcoin with RMB, how to download OKX, web3 airdrop, web3 zero airdrop, Bitget mainland download registration, OKX passport registration, OKX download, Binance download, trading currency side business, OKX contracts, how to recharge RMB on OKX, how to recharge OKX, how to create an NFT wallet, how to recharge RMB on Huobi, cryptocurrency beginner's tutorial, btc8848.com, trading contracts Tony's mindset, contract leverage bit wave, DeFi mining, cryptocurrency airdrop, can cryptocurrency airdrops still be played, what to do if contracts are liquidated, how to buy presidential coins on OKX and Binance, how to buy Ethereum on OKX and Binance, how to play DeFi staking mining, can NFTs still be played, how to play web3 airdrop, how to 打铭文，how to 打符文，cryptocurrency beginner's entry, how to trade cryptocurrencies, can trading cryptocurrencies make money, cryptocurrency beginner's tutorial btc8848.com, can trading cryptocurrencies make money, what is contract leverage, DeFi mining, how to play cryptocurrency airdrop, OKX airdrop, node staking, liquidation, financial freedom, night investment heiyetouzi.xyz