Geopolitical tensions escalated over the weekend, but did not cause serious capital outflows from altcoins. This test suggests that the altcoin’s price is hovering around an equilibrium level and is poised for a big move. As a result, there could be large-scale liquidations in the market.
Altcoins such as SOL, XRP, and XAUT each have distinct factors that can quickly cause volatility and liquidations on both long and short positions.
1. Solana (SOL)
SOL has been trading flat around $84 since early February. Maintaining a narrow range around a fixed price reflects a “volatility compression” phase that often precedes an explosive breakout.
Therefore, SOL derivatives traders, whether they hold long or short positions, could face liquidation soon. Analyst Joan Wesson’s observations of the Solana Buy/Sell Pressure Delta Index support this possibility.
Solana’s buy/sell pressure delta indicator turned red and fell sharply. He explained that historically, this signal does not necessarily indicate further downside. However, it could mark a big bottom before the reversal.
“Historically, this points to two possible scenarios: either a local bottom followed by a strong rally, or the beginning of a strong bear market like the one we saw in 2022,” Joanne Wesson predicted.
According to Coinglass’ 7-day liquidation map, if SOL falls to $74 this week, the potential cumulative liquidation value of long positions could reach $376 million.
Conversely, if SOL recovers to $95, the potential cumulative liquidation of short positions could reach $450 million.
2.XRP
XRP also faces a balance of buying and selling pressure in the short term. Negative news regarding escalating tensions involving the US, Israel and Iran over the weekend did not trigger a sell-off. Instead, XRP stabilized around $1.35.
A recent report by BeInCrypto states that the Net Unrealized Gain and Loss (NUPL) indicator is showing the final stage of a downward trend. Over the past 12 years, March has returned XRP an average of 18%, making it the strongest month of the first quarter.
However, over the past week, 472 million XRP worth $652 million moved to Binance. Binance balances are showing signs of starting to increase after months of decline.
These opposing forces increase the likelihood that XRP traders will face liquidation, regardless of whether they hold long or short positions.
The 7-day liquidation map shows that if XRP drops to $1.20 this week, the potential cumulative liquidation value of long positions could exceed $125 million. Conversely, if the price rises to $1.50, the potential cumulative liquidation of short positions could exceed $157 million.
3. Tether Gold (XAUT)
As the physical price of gold continues to rise, tokenized gold is attracting the attention of traders.
Tether Gold (XAUT) is a digital token backed by physical gold and issued by Tether. According to Coinglass data, XAUT’s total open interest recently exceeded $800 million.
The price of XAUT mainly depends on the price of physical gold. However, as more investors gain exposure to XAUT and increase leverage levels, the risk of liquidation of both long and short positions may increase.
The liquidation map shows that if XAUT rises above $5,600 and hits new highs on Bybit alone, short traders could face liquidation losses of over $61 million. Conversely, if the price falls to $5,000, long traders could face liquidation losses of more than $90 million.
Liquidation losses could be even higher if Binance data is involved. According to a report from CryptoQuant, XAUT has officially entered the top 10 perpetual contract trading pairs on Binance.
Overall, total open interest in the market has fallen from more than $120 billion at the beginning of the year to $94 billion today. Short-term derivatives traders reduced leverage.
They have primarily focused on large altcoins and the tokenization of real-world assets such as gold and silver. Market participants appear to be more cautious and waiting for clearer signals before deciding on the next trend.
