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The feeling of “extreme fear” returned to the market in the last week of January, resulting in short positions that dominate. However, some data indicates that many altcoins can cause widespread liquidations driven by factors of their own.
This week, altcoins like Ethereum, Chainlink, and River are expected to collectively cause liquidations of nearly $5 billion. That’s why.
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1. Ethereum (ETH)
Ethereum’s 7-day liquidation chart shows a severe imbalance between the potential cumulative liquidation of short positions and that of long positions.
If eth rebounds to $3,200 this week, short sellers could face liquidation losses exceeding $4.8 billion.
Traders should be careful for obvious reasons. Analyst CW, using data from Ethereum whales versus retail traders, noted that whales have regained control of eth in the past week. This indicator changed from negative to positive and continued to grow sharply.
The CW analyst said individual investors are liquidating, while whales are increasing their long positions. Those affected by this decline are individual investors, and the whales will continue to spread fear until they surrender, As said.
A recent report from beincrypto also states that while ETH has fallen below $3,000, Many whales have increased their collection. This behavior is likely to fuel a recovery and cause huge losses in… short positions.
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2. Chainlink (LINK)
The LINK asset, like ETH, has seen a glitch in its settlement chart. Data indicated Negative sentiment in the altcoin market at the end of January To push derivatives market traders ​​​​to inject more capital and leverage in short trades on LINK.
As a result, these traders will suffer greater losses if LINK recovers. If LINK rebounds to $13 this week, the total potential cumulative liquidation of short positions could be more than $40 million.
The LINK reserve reached a new monthly low in January, exchange data shows, according to CryptoQuant. The chart indicates that investors continue to accumulate LINK and withdraw from exchanges despite the price decline. These actions reflect long-term confidence in the asset.
Data identified by Santiment’s on-chain analytics platform LINK is one of the least valuable alternative cryptocurrencies after the recent market decline.
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If assembly pressure increases As prices continue to fall, an unexpected rebound may occur. This will increase liquidation risks for LINK short sellers this week.
3. RIVER
River is a decentralized financial protocol (DeFi) that creates a Hide the threads. It allows users to place collateral on one block chain and access liquidity on another without the need to use bridges or packaged assets.
RIVER’s market capitalization rose against the movement of the broader market and reached New record high over $1.6 billion. Just a month ago, the market capitalization was less than $100 million.
This rapid growth has prompted many traders to engage in FOMO behavior. This results in the long positions now taking control, leaving the long side facing a potentially large liquidation value.
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If RIVER moves against expectations and falls below $60 this week, long positions could experience liquidation losses of up to $35 million.
Could this scenario happen? The series data provide several warning signs. Etherscan data shows that the first five River wallets control more than 96.6% of the total supply, indicating extreme concentration.
Investor Honey mentioned in Tweet The currency is controlled only by insiders, and the manipulations continue. It started with MYX, COAI and AIA and ended up with almost zero. Caution should be exercised.
Some investors continue trust that RIVER soon reaches $ 100, while others begin to Express His doubts and the fear of a reversal in the price. This reversal could cause a significant increase in the risk of liquidation of positions along RIVER.
These altcoins reflect the various market dynamics in the altcoin space towards the end of January. Analysts largely agree that the altcoin market Become more selective. Only assets that attract institutional interest are likely to support capital flow and long-term growth.
