The altcoin market entered the third week of August in the red. Market capitalization (TOTAL3) dropped 7%, from over $1.1 trillion to $1.03 trillion. This correction has fueled a short-selling sentiment among derivatives traders.
How much liquidation risk does this pose? The liquidation heatmap highlights several altcoins facing high exposure.
1. Solana (SOL)
Solana’s 7-day liquidation map shows that short liquidation volume (green on the right) dominates long positions starting in the third week of August. However, short positions could face risks as Solana benefits from several bullish developments.
Specifically, Solana is reviewing a new governance proposal, SIMD-0326, which introduces the Alpenglow Consensus protocol to speed up block finalization.
In addition, Solana announced a new record. The network processed over 104,000 transactions per second.
If SOL’s price recovers above $200 this week, more than $1.1 billion in short positions could be liquidated. On the other hand, if SOL drops to $161, about $646 million in long positions face liquidation.
Analysts warn of a more concerning scenario. They predict SOL could fall below $170 before bouncing back above $200 within the same week. This means both long and short traders could face liquidation risks.
2. Dogecoin (DOGE)
Dogecoin (DOGE) is in the spotlight in August as whales and investors accumulate heavily.
In addition, Grayscale has filed with the US SEC to convert its $2.5 million Dogecoin Trust into a spot ETF. Meanwhile, crypto bettors on Polymarket now assign over a 70% chance that US regulators will approve a DOGE ETF by the end of the year.
Despite this bullish news, DOGE’s liquidation map shows that short positions dominate accumulated liquidation volume. Traders seem to expect a correction. DOGE has already gained over 30% this month, climbing from $0.188 to $0.255.
If DOGE drops below $0.20 this week, accumulated long liquidations could exceed $176 million. Conversely, if DOGE climbs back to $0.26, around $290 million worth of shorts would be liquidated.
Trader Tardigrade argued that now is not the time to remain bearish on DOGE. He predicted the coin could be nearing a strong rally.
“Dogecoin’s ascending triangle sets its mid-term target at $1.8,” Trader Tardigrade forecast.
3. Chainlink (LINK)
Chainlink (LINK) is gaining mindshare in August. Investors are excited about the Chainlink Reserve initiative announced earlier this month.
A recent BeInCrypto report noted that whale wallets added more than 1.1 million LINK in the past seven days.
However, the same report also revealed that LINK exchange reserves are rising again. This suggests investors are beginning to take profits after LINK’s more than 50% rally since the start of the month.
LINK’s liquidation map looks relatively balanced because both bulls and bears have strong incentives.
If LINK drops below $22, about $85 million in long positions could be liquidated. If LINK rallies to $27, around $85 million in shorts would face liquidation. The price range is the same, and the liquidation volume is nearly identical.
Meanwhile, market sentiment remains greedy at the time of writing, while the altcoin season index stands at 51 points.
The post 3 Altcoins at Risk of Major Liquidations in the Third Week of August appeared first on BeInCrypto.
