Gay allegory, shaky maybe leaning to very probable yes. Trans, most likely not.

And don't misunderstand this as me being against trans, it just isn't what is agreed upon when talking about this particular fairytale.

The theory is that The Little Mermaid is a secret love letter to a man he was in love with, but who did not reciprocate.

As far as anyone knows, H.C. Andersen died a virgin, and some researchers believe that he put a little "x" in his diary each time he had masturbated (off topic, but kind of interesting).

The thing is that H.C. Andersen was a very peculiar and complex person, and characterizing/defining his sexuality is almost impossible. Some also believe that he was bisexual, few believe he was autosexual, but most agree that he was not heterosexual.