$SOL 3 altcoins at risk of liquidation in the third week of December
According to the fear and greed index, panic sentiments are prevailing in the cryptocurrency market in the third week of December, reaching the level of 'extreme fear'. The negative background has contributed to strengthening the positions of short sellers.
Despite the pressure, some altcoins have internal growth factors that may provoke the liquidation of short positions. We discuss which assets are involved.
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The weekly liquidation map of SOL shows that the potential volume of forced closure of short positions is twice that of long ones. If Solana's prices rise to $147 this week, traders with short positions could incur losses of up to $1 billion. In the opposite scenario, if the price drops below $120, holders of long positions will face liquidations amounting to about $500 million.
Several factors indicate the need for caution when holding short positions this week.
Firstly, exchange-traded funds (ETFs) on Solana recorded a positive capital inflow for seven consecutive days last week. Notably, Bitwise SOL ETF has shown an inflow of funds for 33 consecutive days since its launch. Currently, it manages SOL worth over $600 million. The trend indicates sustained institutional demand.
Secondly, over the past four weeks, the asset has formed a solid support level around $130. An additional factor that improved market sentiment was news about the expansion of XRP's functionality in the decentralized finance (DeFi) sector on the Solana blockchain with the assistance of Hex Trust.
As a result, SOL has gained substantial grounds for recovery this week, which may initiate a wave of liquidations of short positions.
Similar to the situation with SOL, overall negative market sentiment has encouraged traders dealing with derivatives on ADA to increase investments and leverage in short positions.
This behavior has led to a significant increase in the total volume of potential liquidations of short positions. If the price of Cardano rises to $0.45 this week, losses on short positions could reach $50 million. Conversely, if it drops to $0.35, holders of long positions risk facing liquidations amounting to about $19.5 million.
One of the key factors that traders opening short positions on ADA should consider to reduce risks is the positive information background surrounding the Midnight project.
Midnight Network is a new blockchain developed by Input Output Global (IOG), which is behind the creation of Cardano and founded by Charles Hoskinson.
Midnight Network specializes in ensuring privacy using zero-knowledge proof technology, specifically ZK-SNARKs. Over the past seven days, the NIGHT token has shown a growth of more than 150%. The project also received the 'Breakthrough of the Year' award from BeInCrypto.
Growing demand for NIGHT stimulates demand for ADA. According to the trading platform Taptool, over the past five days, the trading volume of NIGHT on decentralized exchanges (DEX) has exceeded 85 million ADA. Additionally, ADA holders have the opportunity to earn NIGHT through staking their coins.
PIPPIN is a meme coin that attracted investor attention at the end of the year. Its market capitalization has grown from less than $60 million to over $350 million in just three weeks.
The liquidation map indicates that the total potential volume of long position liquidations remains higher than that of short positions. The data suggests that many short-term traders still expect continued price increases.
However, such expectations come with significant risk. Recent analysis conducted by the on-chain service Evening Trader Group showed that 93 wallet addresses currently control 73% of the total token supply.
These wallets are divided into three main accumulation clusters, each demonstrating different origins and behavioral patterns. According to Evening Trader Group, this accumulation may be the primary driving force behind the recent price increase. On the other hand, selling pressure may arise at any moment.
Furthermore, the project-related account (ThePippinCo) has not published any updates since June. This silence has raised concerns about the team's commitment to the project's development.
If the price of PIPPIN falls below $0.30 this week, long positions amounting to over $9 million could be liquidated. This figure could be even higher if the asset faces a sharp crash similar to that which affected other meme tokens that fell victim to manipulation, such as rug pulls.
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