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Note that the escalation of geopolitical tensions over the weekend did not lead to a significant outflow of capital from altcoins. This experience indicated that the altcoin prices are around the equilibrium levels and are preparing for a major move. As a result, the market also has the potential for widespread liquidations.
Coins like Solana, XRP, and XAUT feature different engines that can quickly spread volatility and liquidations in long and short positions.
1. Solana (SOL)
It should be noted that Solana has traded sideways around $84 since early February. Keeping a narrow range around a fixed price indicates a “volatility compression” phase that often precedes a strong run.
For this reason, Solana’s derivatives traders may face a close liquidation if they hold long or short positions. Analyst Joao Widson’s observation of Solana’s delta buy/sell pressure indicator supports this possibility.
Solana’s buy/sell pressure delta indicator turned red and fell sharply. Joao Widson explained that historically, this signal does not necessarily indicate further decline. However, it may represent an important bottom before a trend reversal.
“Historically, this has indicated two possible scenarios: a local bottom followed by a strong upward move, or the beginning of a strong market low as we saw in 2022,” predicted Joao Widson.
Coinglass’ 7-day liquidation chart shows that if Solana falls to $74 this week, the potential cumulative volume of liquidations in long positions could reach $376 million.
On the other hand, if Solana rebounds to $ 95, the potential cumulative volume of short liquidations could reach $ 450 million.
2. XRP
Ripple XRP also faces a short-term balance between buying and selling pressure. Negative news about the escalation of tensions between the United States, Israel and Iran over the weekend did not lead to a sell-off. Instead, XRP remains stable around $1.35.
A recent Pinkrypto report stated that the Net Unrealized Profit and Loss (NUPL) indicator is showing the latest stage of a downward trend. Over the past 12 years, March has seen an average return of 18% for XRP, making it the strongest month of the first quarter.
However, during the past week, 472 million XRP worth $652 million moved on the Binance platform. Binance balances have shown signs of returning to growth after months of decline.
These opposing forces increase the likelihood that XRP traders will face liquidation of their positions, regardless of whether they hold long or short positions.
The 7-day liquidation chart shows that if XRP falls to $1.20 this week, the total potential liquidation volume of long positions could exceed $125 million. If the price rises to $1.50, the total volume of potential liquidation of short positions may exceed $157 million.
3. Tether Gold (XAUT)
Tokenized gold is attracting traders’ attention as physical gold prices continue to rise.
Tether Gold (XAUT) is a digital token backed by physical gold and issued by Tether. Coinglass data shows that the total open interest for XAUT recently exceeded $800 million.
The price of XAUT is mainly based on the current gold price. However, as more investors gain exposure to XAUT and leverage levels increase, liquidation risks for both long and short positions may increase.
The liquidation map shows that on the Bybit platform alone, if XAUT rises above $5,600 and makes a new high, short traders could face liquidation losses of more than $61 million. While the price falls to $5,000, long traders could face liquidation losses exceeding $90 million.
When Binance data is included, qualified losses can be greater. CryptoQuant reported that XAUT has officially entered the top 10 perpetual contract trading pairs on Binance. Additional information
The overall market saw a total drop in open interest from more than $120 billion at the beginning of the year to $94 billion currently. Traders in short-term derivatives reduced leverage.
They mainly focused on cryptocurrencies with a large market capitalization and tokenized assets linked to the real world such as gold and silver. Market participants seem to be more cautious and wait for clearer signals before determining the next trend.
