Three altcoins at risk of major liquidation in the fourth week of July

The fourth week of July marks a record-breaking moment as the total crypto market capitalization reaches $4 trillion. Altcoin’s market capitalization is also on the path to regaining its all-time high (ATH).

In this context, some altcoins that are highly preferred by short-term traders using critical leverage can face major liquidation.

1. XRP

According to Coinglass, XRP’s open interest (total value of open positions in the derivatives market) was a record high of $10.9 billion in July.

In particular, the funding rate was positive, rising to its highest level from the beginning of the year. If future prices exceed spot prices, a positive financing rate will occur. This reflects strong market optimism, as most traders expect prices to rise and long positions to be open.

This has made the XRP liquidation map unbalanced between its strengths and short positions.

According to the 7-day liquidation map, the total cumulative liquidation of long positions is far greater than the total of short positions. If XRP drops to $3 this week, a long liquidation could reach nearly $1 billion.

There is some basis for this concern. Beincrypto recently reported warning signs of possible short-term fixes to XRP, including a decline in new investors.

However, Kaiko’s latest report shows that the 1% market depth for XRP has reached a new annual high of nearly $10 million in the spot market. This will result in only ETH on top of SOL, BNB, ADA.

This market depth and increased liquidity suggests that XRP could recover quickly when prices drop. Still, rapid and unexpected price movements can put both long-term derivative traders at significant risk.

2. Doge

Doge raised investors’ expectations in July. In particular, Bit Origin is planning to raise $500 million to establish Dogecoin Treasury. Additionally, some metrics suggest that the meme coin season could be revived, along with the ongoing altcoin season.

Coinglass data shows Doge’s funding rate reached an annual high on July 21st, when the price returned to $0.28. Many short-term traders were hoping to open up long positions and Doge would continue to rise.

As more traders use leverage to bet on Doge’s price spikes, the risk of long liquidation increases.

Recently, Lookonchain reported that famous high-lipid trader James Wynn had settled some of his position.

At the time of writing, Doge has fallen from $0.28 to $0.266 from its July high. The seven-day liquidation map shows that if Doge drops to $0.236 this week, the cumulative long liquidation total could reach $300 million.

A recent Beincrypto report points out that long-term Doge holders are quietly withdrawing funds, potential benefits being acquired.

3. Add

Cardano (ADA) reached a new history high of open interest at $1.74 billion in July. This happens when the ADA enters price hike for the fifth consecutive week.

Many analysts remain bullish and predict that the ADA could soon reach $1. On-chain metrics such as age consumption and MVRV ratio suggest that prices could continue to rise in July.

According to the 7-day liquidation map, if the ADA reaches $1, the short position could face a cumulative liquidation of up to $58 million. However, the downside risk is even greater. If the ADA is categorized as $0.78 this week, the cumulative long liquidation could reach $120 million.

Are there any sources of concerns that could negatively affect ADA prices? probably. It has been revealed that Cardano co-founder Charles Hoskinson is preparing to publish an audit report that could affect trader sentiment.

At the time of writing, open profits across the market continue to increase, exceeding $213 billion. The crypto derivatives market has never been hotter.

“In the last 24 hours, 152,419 traders have been liquidated, bringing the total liquidation to $553.68 million,” Coinglas reported.

Of the liquidation of more than $5 billion in the last 24 hours, more than $370 million came from a long position. This raises concerns that this trend could last until the fourth week of July.