Tron (TRX) has shown signs of a bullish rally as it captured attention due to a rising short interest paired with substantial long positions.

Recent data from Hyblock Capital revealed an unusual pattern: more traders are betting against TRX, but larger position sizes are favoring the long side.

This setup often hints at the possibility of a short squeeze, where a price increase forces traders holding short positions to close, which in turn drives the price even higher.

Source: Hyblock Capital

Tron Breaks Hedge But Is a Rally Imminent?

TRX recently broke above a key resistance level in a triangle pattern, signaling a potential shift toward bullish momentum.

The breakout of this triangle pattern indicates that TRX could be set to capitalize on this imbalance between short and long positions. As the price pushed above $0.17, it approached a crucial resistance level at $0.18.

Maintaining this level of momentum would likely continue to pressure short positions, leading to an increase in buying pressure and amplifying TRX’s upward movement.

However, if Tron (TRX) fails to break above $0.18, it could face a temporary pullback.

Source: Trading View

The TRX/USDT chart on a 1-hour timeframe highlights TRX’s recent breakout from a prolonged downtrend.

The upward movement above $0.17 underscores growing confidence in TRX, especially as it has shifted its momentum following the breakout.

This rally not only demonstrates strong bullish momentum but also underscores the potential for a short squeeze.

When more traders hold short positions and the price rises, the pressure mounts on these positions, and the resulting short squeeze often leads to sharp price increases.

Dominance of USDT

Moreover, the dominance of Tether (USDT) on the Tron blockchain adds another layer of strength to TRX’s outlook.

USDT accounts for around 72% of the stablecoin market, with most of its transactions occurring on the Tron blockchain, primarily due to its lower transaction fees and faster processing times compared to Ethereum.

The Korean government also recently highlighted the importance of stablecoins in domestic trading transactions, with 10% of domestic trade transactions using stablecoins, further demonstrating the increasing role of TRON’s blockchain in the stablecoin market.

Source: CryptoQuant

The rising transfer volume of USDT on TRON reflects a growing confidence in TRX, making it a preferred blockchain for cost-effective and efficient transactions.

This uptick in transfers suggests increased trading activity and a positive liquidity signal for the TRON ecosystem. Its cost-efficiency and transaction speed have become appealing to investors looking for quick, low-fee transfers, driving more user adoption.

Additionally, this trend may support an increase in trading volume for TRX, especially as more users turn to TRON as a viable alternative for stablecoin transactions.

What’s Next for Price Action?

In the coming days, TRX’s price action would likely hinge on its ability to maintain its current momentum and break through the resistance at $0.18.

A successful breakout above this level could accelerate TRX’s rally, potentially creating a broader market impact if short positions are forced to close.

However, if TRX faces resistance and experiences a pullback, it might still see sustained interest due to its role in the stablecoin ecosystem and the growing adoption of its blockchain for transactions.

TRX’s rising short interest combined with substantial long positions and a bullish breakout points to the potential for a short squeeze.

TRON’s role in stablecoin transfers and USDT dominance on its blockchain provides strong fundamentals that could support further growth.

While risks remain if TRX fails to overcome resistance levels, its current trend reflects a favorable setup for further price gains.

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