MERL surged 118% in a single day, with short-selling concentration significantly decreasing.

Key points

MERL (Merlin Chain) saw an actual increase of 118-149% UTC on November 27th , far exceeding the 30% mentioned in the query. The price rose from approximately $0.29 to the $0.48-$0.53 range, with 24-hour trading volume surging to $172-175 million. Short-selling concentration did indeed show a significant decline, mainly reflected in: short-selling liquidation reaching $6.32 million (accounting for 77% of total liquidations), persistently negative funding rates forcing short sellers to pay long positions, and a 138% surge in open interest while funding rates remained negative.

Price performance analysis

Price increase data

The price movement shows a steady climb from $0.290 on November 26th to $0.485 at 20:00, followed by a brief pullback to $0.410, before surging again to a daily high of $0.531 at 02:00 on November 27th. (coingecko )

Catalysts for an upward trend

1. Bithumb upgrade hype (November 25)

• Bithumb has suspended MERL deposits and withdrawals for a "network upgrade" (enhancing security and scalability).
• The first major event since the launch of the Korean Won trading pair (MERL/KRW) on October 21.
• This triggered speculative buying, driving an initial 10-30% increase that amplified to over 100% ( cryptrank rootdata)

2. Binance Alpha Rumors

• Rumors of "Binance Alpha" launching on social media have sparked FOMO (Fear of Missing Out) sentiment .

3. Boost to the Bitcoin ecosystem

• A 3-4% increase in BTC provides overall support for Altcoin.
• MERL topped the gainers list on multiple exchanges (benzinga)

Evidence of a decline in short-selling concentration

Derivatives Market Data

Open interest surged

• Total open interest: $158.7M (328 million MERL), a surge of +138% in 24 hours.
• Major exchanges by percentage of trading volume: Binance $54.75M (+116.7%), Bybit $30.97M (+184.9%), OKX $18.37M (+110.9%)

Funding rates remain negative

Negative funding rates mean that short positions are too concentrated and need to continuously pay fees to long positions, creating natural pressure to reduce positions.

Liquidation data shows short sellers suffered a crushing defeat.

24-hour clearing overview

• Total liquidation amount: $8.17M
• Short liquidation: $6.32M (77%) vs. Long liquidation: $1.85M
• The short-selling volume was four times that of the long positions, indicating that short positions were forced to close, directly reducing the concentration of short positions.

Liquidation Risk Map

• The current price is around $0.46, with the downside risk of long positions being concentrated at $0.44 ($2.36M single-point risk).
• The risk of short covering begins to accumulate at $0.465, with a cumulative risk of $2.53 million around $0.50.
• Short squeeze potential : A price break above $0.465 could trigger a chain reaction of short liquidation.

Short-selling concentration reduction mechanism

1. Forced liquidation : $6.32M short liquidation directly reduces short positions.
2. Funding cost pressure : Negative funding rates of 1-1.5% per hour force short sellers to actively reduce their positions.
3. Open interest growth : 138% of the OI growth came from short covering, diluting short position density.
4. Improved liquidity : Bithumb upgrades are expected to improve the trading environment and reduce short-selling defensiveness.

On-chain activity analysis

TVL and transaction data

• Current TVL : $39.86M (mainly in MerlinSwap and Surf Protocol)
• 24-hour change : -2.86% (Slight outflow, possibly due to profit-taking)
• Trading volume : 84,000 transactions per day, $9,481 DEX trading volume
• Active URLs : Approximately 4,900 daily active URLs

On-chain activity remained relatively stable, indicating that the price increase was primarily driven by CEX trading rather than a surge in protocol usage.

Social sentiment and market reaction

Despite the significant price increase, there has been relatively little discussion on social media about MERL short covering or a decrease in concentration. The official account @MerlinLayer2 primarily focuses on the infrastructure upgrade on November 26th and has not directly commented on price action. This "quiet" rise may indicate institutional short covering rather than retail FOMO.

Technical Outlook

Key price level

• Support level : $0.44 (area where long positions are concentrated)
• Resistance level : $0.465 (starting point for short liquidation)
• Short squeeze target : $0.50+ (cumulative short risk $2.5M+)

risk assessment

• Upside risks : Persistent negative funding rates and short-selling liquidation risks could drive further price increases.
• Downside risk : The risk of long positions being liquidated below $0.44 is moderate, and the downside is limited.
• Volatility : A 138% increase in open interest indicates a highly leveraged market, suggesting continued high volatility is expected.

in conclusion

MERL's 118% single-day gain was indeed accompanied by a significant decrease in short-selling concentration. Through $6.32 million in short liquidation, continued negative funding rate pressure, and a 138% increase in open interest, the market structure has shifted from a state of concentrated short selling to a more balanced one. The Bithumb upgrade acted as a catalyst, triggering a technical short squeeze. In the short term, the continued negative funding rate and the risk of short liquidation above $0.465 still support further upside potential, but the important resistance area around $0.50 needs to be monitored.