The altcoin short squeeze strategy uses AI to create robots that detect abnormal signals.

Recently, opportunities for short squeezes in altcoins have frequently emerged. I successfully captured the $VOXEL market using an AI-built monitoring system. This article will decode the strategy logic and robot construction methods to help you create your own monitoring tool.

The current cryptocurrency market is showing a risk-averse trend influenced by macro policies, and altcoin traders are facing liquidity challenges. The perpetual contract market is becoming a new battlefield for major funds, and we can capture short squeeze opportunities through the following strategies:

1. Comprehensive Analysis of Short Squeeze Strategy#

In-depth breakdown of trader manipulation paths:

1. Liquidity Dilemma#

Excessive selling pressure in the spot market
Direct selling triggers price collapse

2. Breaking the Contract Market#

Short stop-loss/liquidation provides liquidity
Perpetual contracts become the best exit channel

3. Inducing Short Tactics#

Raising spot prices affects the mark price
Creating a bearish technical pattern

4. Dual-Track Arbitrage#

Contract prices continue to trade at a discount
Negative funding rates expand arbitrage space

5. Ultimate Harvesting#

Breaking through key resistance triggers liquidation
Going short completes a two-way harvest

The essence of this strategy is to transfer selling pressure through the contract market, utilizing short covering to provide liquidity exits.

2. Core Monitoring System#

Evolution path of short squeeze market:
Extreme negative funding rate → Abnormal growth in open interest → Breaking resistance → Long-short ratio reversal → Indicator normalization

Key monitoring indicator matrix:

1. Abnormal Funding Rate Movements#

Threshold: <-0.1%
Judgment criteria: Continuous 3 cycles of expanding negative values

2. Surge in Open Interest#

Monitoring formula: 3-cycle average / 10-cycle average > 2
Need to exclude market-wide bullish interference

3. Price Breakout Behavior#

Breaking previous highs/key EMA
Accompanied by increased trading volume

4. Liquidation Warning#

Short liquidation volume reaches twice the monthly average
Sudden change in large holder position ratio

3. AI Monitoring System Construction Guide#

Achieve automated monitoring using Python + Telegram Bot:

1. Data Collection Layer#

Obtain key parameters for perpetual contracts from Binance API:

# Core data fields
params = [
    'mark_price',         # Mark price
    'index_price',        # Index price  
    'basis',              # Basis
    'basis_percent',      # Basis rate
    'last_funding_rate',  # Funding rate
    'oi',                 # Open interest
    'ls_account_ratio',   # Long-short account ratio
    'ls_trader_ratio',    # Large holder long-short ratio
    'taker_ratio'         # Taker buy-sell ratio
]

(API documentation: https://developers.binance.com/docs/derivatives)

2. Data Processing Layer#

Frequency: Every 5 minutes
Storage: CSV time series database

Anomaly detection:

if abs(funding_rate) > 0.001:
    if oi_3ma / oi_10ma > 2:
        trigger_alert()

3. Alert Push Layer#

Real-time push via Telegram Bot
Includes snapshots of key indicators
Accompanied by deep links to trading pairs

Deployment suggestions:

Use cloud functions for scheduled tasks
Configure multiple exchange data source verification
Add volatility filtering conditions

Seize structural opportunities in the market and deploy your digital sentinel immediately! It is recommended to combine on-chain data verification to improve the risk control system.

Original @AI Soros Kot

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