欧易NFT

欧易NFT

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The altcoin short squeeze strategy utilizes AI to develop robotic programs that monitor abnormal signals.

Recently, opportunities for short squeezes in altcoins have frequently emerged. I successfully captured the $VOXEL market trend by writing a monitoring program using AI. This article will detail the strategy logic and prompt writing techniques to help you create your own monitoring bot.

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The current cryptocurrency market is showing a risk-averse trend influenced by macro policies, with liquidity tightening for risk assets. Holders of large amounts of altcoins are facing a dual dilemma: difficulty in selling in the spot market and an urgent need to find liquidity outlets. The perpetual contract market is becoming a new battleground for these holders to cash out, creating excellent opportunities for sharp traders.

1. Short Squeeze Strategy Operation Mechanism#

How do holders exit through perpetual contracts? The complete logic chain is as follows:

1. Holder's Dilemma#

  • Holding a large amount of spot chips
  • Direct selling triggers a price avalanche
  • Insufficient market depth makes it hard to sell

2. Advantages of Perpetual Contracts#

  • Short stop-loss/liquidation requires buying to hedge
  • Forced liquidation mechanism creates liquidity
  • Contract market depth is better than spot

3. Short Inducement Strategy#

  • Raising spot prices affects the mark price
  • Creating a bearish technical pattern
  • Attracting retail investors to establish short positions

4. Rate Arbitrage#

  • Excessive shorts lead to negative funding rates
  • Holders profit from long positions in two ways:
    • Funding rate income
    • Price difference income

5. Ultimate Harvest#

  • Pushing prices to key resistance levels
  • Triggering large-scale short liquidations
  • Taking the opportunity to distribute spot chips
  • Can reverse to short for a second harvest

The essence of this strategy is to utilize the forced liquidation mechanism of the contract market to turn shorts into liquidity providers.

2. Key Monitoring Indicator System#

A complete short squeeze market will show the following data evolution:
Extreme negative funding rate → Abnormal growth in OI → Breaking resistance levels → Long-short ratio decreases → OI falls & funding rate normalizes

Specific monitoring indicators are as follows:

1. Funding Rate Anomalies (Core Indicator)#

  • Negative value breaks the -0.1% threshold
  • Indicates high control of the spot market
  • Signal of excessive short concentration

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2. Surge in Open Interest (OI)#

  • 3-period moving average / 10-period moving average > 2
  • Holders are building positions and receiving short chips
  • Market heat significantly increases

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3. Price Breakout Behavior#

  • Breaking key resistance levels
  • Triggering short stop-loss orders
  • Causing a chain liquidation reaction

4. Indicator Regression to Normal#

  • Long-short ratio rebounds to normal range
  • OI volume gradually shrinks
  • Funding rate returns to neutral value

Abnormal fluctuations in funding rates and open interest are the core indicators for early warning!

3. AI Monitoring Bot Construction Guide#

Build an automated monitoring system using Python + Telegram Bot, with key implementation steps:

1. Data Collection Module#

Obtain key data for perpetual contracts from the Binance API:

# Core data fields
"mark_price",      # Mark price
"index_price",     # Index price  
"basis",           # Basis
"basis_percent",   # Basis percentage
"last_funding_rate", # Funding rate
"oi",              # Open interest
"long_short_account_ratio", # Long-short account ratio
"top_trader_account_ls_ratio", # Large trader account long-short ratio
"top_trader_position_ls_ratio", # Large trader position long-short ratio
"taker_buy_sell_ratio" # Taker buy-sell ratio

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

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2. Data Storage Solution#

  • Collect data every 5 minutes
  • Store CSV files by trading pair
  • Path: data/{symbol}.csv

3. Intelligent Alert Logic#

Set composite trigger conditions:

if (abs(funding_rate) > 0.001) and (MA(OI,3)/MA(OI,10) > 2):
    send_telegram_alert()
  • Absolute value of funding rate > 0.1%
  • Short-term open interest surges by 200%
  • Automatically push Telegram alerts

After deployment, it is recommended to combine technical analysis to confirm entry timing and set dynamic take-profit and stop-loss strategies. Opportunities always exist in the market; take action now to deploy your AI trading assistant!

Original @AI Soros Kote

OKX This Month's Activities#

New users can enjoy exclusive benefits:

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Further Reading#

Top 10 Exchanges in China for 2025 🔥
Real Wealth Stories in the Crypto World: From 0 to 11 Million

AI monitoring bot | Bitcoin purchase guide | Airdrop collection tutorial | Exchange registration | Contract trading strategies | Digital currency wallet | Leverage trading tips | DeFi mining | NFT investment | Web3 introduction

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