The first week of January showed signs of positive sentiment returning to the market, with altcoins heading for a recovery. However, questions remain as to whether this rebound can be sustained.
Some altcoins could cause large-scale liquidations as their derivative data approaches the danger zone that has caused liquidations in the past. Which altcoins stand out?
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1. Ethereum (ETH)
A number of bullish factors are supporting long Ethereum (ETH) positions this week. Recently, the number of new ETH holders has been rapidly increasing. The entry queue for Ethereum staking has exceeded the exit queue. On-chain Ethereum transactions have reached their highest level in a decade.
As a result, traders increased the capital and leverage of their long positions. This made long-term liquidations far more likely than short-term liquidations.
However, issues with metrics emerged. ETH’s estimated leverage ratio has reached an all-time high.
This ratio is equal to the exchange’s open interest divided by its coin reserves. This reflects the average leverage used by traders. The rise in value indicates that more investors are taking high-leverage risks in derivatives trading.
Long-term traders may think they can make short-term gains as bullish factors develop. Still, rising leverage serves as a serious warning. When it comes to ETH, large-scale liquidation events can occur at any time.
If ETH falls to the $2,800 zone this week, the potential for long-term liquidations could exceed $5.8 billion.
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2. Bitcoin Cash (BCH)
Veteran investor Peter Brandt recently mentioned Bitcoin Cash in his latest outlook. He suggested that BCH is approaching a key resistance level at $650. A breakout there could set a higher price range.
The recent BeInCrypto report also highlights several factors supporting BCH’s further rise.
Derivatives traders appear to share this bullish view. They allocate more leverage capital to long positions than to short positions.
But Coinglass’ data reveals another big concern. BCH open interest reached $980 million, the highest level ever.
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Historically, when BCH open interest exceeds $600 million, it is followed by a sharp and prolonged price correction.
Additionally, BCH is trading near the strong resistance level at $650. This increases the likelihood that profit-taking pressure will emerge at any time.
If BCH falls to the $570 level this week, cumulative long liquidations could exceed $80 million.
3. PEPE
Capital flows in early January indicate a shift towards meme coins. This has once again raised expectations for the new meme coin season.
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Recent predictions that PEPE’s market capitalization could reach $69 billion in 2026 have further increased positive sentiment towards the token.
According to PEPE’s liquidation map, if the price drops to $0.00000613, the long-term liquidation could exceed $15 million. This corresponds to a decrease of approximately 10% from current levels.
This scenario remains plausible. PEPE has soared more than 70% since the beginning of the year. Early buyers are now waiting for profits and may choose to take profits while market skepticism persists.
Additionally, analysts are warning of a possible Elliott Wave correction. They suggest that PEPE may have already completed its third upwave.
Cryptocurrency markets are likely to face continued volatility in the coming days as geopolitical tensions increase. If we don’t learn from the mistakes that led to more than $150 billion in liquidations in 2025, similar losses could be repeated in 2026.
