Total open interest in the cryptocurrency market declined in October, indicating a cooling of leveraged exposure among altcoin investors, but some individual altcoins still carry the potential risk of large losses.
Which altcoins are they and what are the driving factors behind them? Let’s take a closer look here.
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1. Solana (SOL)
Solana (SOL) fell below $200 in October, raising concerns among investors. Many holders have transferred SOL to exchanges and have indicated their intention to sell.
According to a recent BeInCrypto report, Solana investors transferred 688,000 SOL worth over $132 million to the exchange last week.
The 7-day liquidation map also reflects bearish sentiment, with near-term liquidation levels (shown in the bar on the right) ranging from $193 to over $200.
However, this bearish outlook could backfire as several data points suggest that SOL could see some positive momentum this week.
First, Solana enters a week full of bullish ecological events that could spark short-term optimism. Second, analyst Lark Davis noted that SOL’s price structure appears to be forming a double bottom, with a potential upside target of $250.
Additionally, BeInCrypto reported that a16z invested $50 million in Jito to power Solana’s MEV infrastructure.
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If SOL can recover above $214 this week, more than $1 billion of short positions could be liquidated. Conversely, if SOL falls below $165, approximately $800 million of long positions will face liquidation.
2. Bitensor (TAO)
In October, Bittensor (TAO) not only rebounded strongly after the market crash on October 11th, but also dominated community discussions in the DePIN (Decentralized Physical Infrastructure Network) sector.
While most altcoins suffered sharp declines, investors became more selective and focused on projects with stronger fundamentals. TAO emerged as one of the preferred options.
Recent actions by Grayscale have strengthened the agency’s confidence in the TAO. The company has allocated more than 33% of its Grayscale Decentralized AI Fund to TAO and filed a Form 10 with the SEC on behalf of the Grayscale Bittensor Trust.
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From a technical perspective, analyst Crypto Eagles suggested that TAO’s current price structure is similar to Zcash (ZEC) in its early growth stages, suggesting that TAO could soon experience a strong bullish candlestick with a large range.
For short sellers, this development may seem unfavorable. If TAO rises to $500 this week, it could face losses of more than $20 million. Conversely, if TAO falls to $381, long traders would face a liquidation of $18 million.
3.ChainOpera AI (COAI)
ChainOpera AI (COAI) emerged as one of the companies to watch in October. The company’s market capitalization jumped from less than $100 million at the beginning of the month to more than $5 billion within weeks.
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But this rapid growth came at a cost. COAI has since plummeted nearly 90% from its all-time high of $46. The sharp decline led to an increase in short positions and a severe imbalance on the liquidation map.
According to the data, approximately $11.5 million in short positions could be liquidated if COAI recovers above $7 this week. On the other hand, a decline to $3.73 would put about $2.7 million of long positions at risk.
Given this setup, short traders should be careful. After a 90% correction, buying pressure will return, potentially triggering a short squeeze.
With both retail and institutional investors showing renewed interest in AI-related crypto projects, many traders believe that COAI’s journey is not over yet and that the token could soon regain some of its lost value.
While each of these altcoins has its own catalysts that could fuel a recovery, most of the altcoin market continues to struggle under selling pressure. October paints a complex and risky picture for both long and short positions.
