Crypto’s total market capitalization hit a new high of over $4 trillion in October. Bitcoin and top altcoins attract most of the liquidity. This means that the potential liquidation volume has risen significantly.
This article highlights the potential risks faced by major altcoins that could lead to massive liquidation of short-term traders that had been overly reduced in the second week of October.
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1. Ethereum (eth)
In early October, Messari reported that institutional investors (DATS) retain most of their ETH supply than BTC. This confirms that the accumulated demand for ETH continues to be strong.
“ETF growth, ETH staking ETF approval and global liquidity expansion are the key catalysts for ETH’s next leg in its step function,” predicted analysts at Messari.
Short-term traders are confident in their long positions and look forward to ETH reaching new this month. This explains why the total liquidation volume of long positions has recently surpassed that of shorts.
According to Coinglas, if ETH drops to $4,030 this week, it could liquidate a longer position of over $9 billion. Conversely, if ETH exceeds $5,000, it could wipe out a short position of around $2 billion.
However, there are warning signs that long traders may be ignoring it.
First, about 97% of all ETH addresses are currently profitable. Historically, when this ratio exceeds 95%, investors often get profit, and they often stand at the top of the potential market. Second, on-chain data shows that some long-term ETH whales have begun selling. On October 5th, Trend Research sold 77,491 ETH (valued by $354.5 million). Lookonchain reported that another ETH whale was active after four years to move the coin into exchange. Sponsored Sponsors
If sales pressure continues to be built this week, mass liquidation of long positions could continue.
2. XRP
In October, the SEC will review multiple XRP ETF applications from major financial institutions such as Franklin Templeton, Hashdex, Grayscale, ProShare, and Bitwise.
“Some of the industry’s biggest names are involved, with fund sizes ranging from $200 million to 1.5 tons. If even one of these is approved, it could bring a huge wave of institutional money to XRP,” predicted analyst Crypto King.
This optimism has led traders to bet heavily on XRP’s bullish continuation. The clearing heat map shows clear imbalances, with long positions dominating.
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If XRP drops to $2.65 this week, it could liquidate the long of around $560 million. Conversely, if it rises to $3.3, it could wipe out the approximately $370 million shorts.
However, there have been some warning signs surfaced for long-time XRP traders.
These are strong signs of profitable activity, poses a great liquidation risk to over-changed long positions.
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3. Binance Coin (BNB)
BNB continued to set new highs in October, trading above $1,200. Traders are caught up in FOMO rallies and appear to be stacking up in bullish positions for short-term profits.
The seven-day liquidation map shows that if BNB drops to $1,034, the total liquidation could exceed $300 million. Conversely, if it rises to $1,340, the short liquidation totals around $80 million.
BNB still managed to extend the rally, but BNB’s total open interest (OI) in October exceeded $2.5 billion, the highest level ever. Historical data shows that BNB’s OI spikes often precede sharp market corrections.
If the uptrend continues, long-term traders can still make a profit. However, without strict risk management, if the BNB suddenly turns around, they face the risk of heavy liquidation losses.
