In the 2nd week of February, 3 Altcoins face liquidity risks
After three consecutive weeks of sharp declines, buying pressure has returned to the market. However, it is not enough to completely remove the doubts of investors. A number of altcoins are now showing particular incentives that could fuel excessive recoveries this week, adding to liquidity risks.
Ethereum (ETH), Dogecoin (DOGE) and Zcash (ZEC) could together generate more than $3.1 billion in liquidity if traders fail to properly assess the following risks.
1. Ethereum (ETH)
ETH's 7-day liquidity map shows that liquidity from short positions is greater than that from long positions.
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Many traders seem to expect further decline. ETH has already fallen about 40% since mid-January.
This prospect of depression faces an ever-increasing risk. On-chain data shows that only around 16 million ETH remain on exchanges. This level is the lowest since 2024.
Recent sales charges have accelerated outflows from exchanges. Low exchange rates reduce the supply. This variable can amplify price recovery due to supply-demand imbalances.
In addition, more than 4 million ETH are also sitting on the dedicated queue. This further restricts the liquidity of the market.
For these reasons, if the recovery of ETH is strengthened, short sellers may face high risk. ETH rose to $2,370 this week, with potential liquidity from short positions reaching $3 billion.
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2. Dogecoin (DOGE)
Dogecoin (DOGE) has fallen below $0.10. This level corresponds to the 2024 low. The 7-day liquidity map shows short liquidity of up to $98 million if DOGE returns to $0.109 this week.
Analysts argue that such a scenario remains plausible given the short- and long-term structures.
In no time at all, a mercantile tardigrade suggests a bull's-eye flag design. This setup suggests that DOGE could move towards $0.12 this week.
From a long-term perspective, analyst Javan Mark highlights the formation of High Lows (HL) followed by High Highs (HH). This structure indicates strength.
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“With higher lows holding, we could see Dogecoin rise over 640% from current ATH levels at ~$0.73905,” predicted Javon Mark.
The discussion around Dogecoin can also be revived. In early February, billionaire Elon Musk responded to an inquiry from Tesla owners regarding Silicon Valley token Dogecoin.
3. Zcash (ZEC)
Since January 8th, Zcash (ZEC) has dropped about 50%. The decline followed the announcement that the entire Electric Coin Company (ECC) team, the main developer behind Zcash, would be leaving. Broader negative market sentiment further extended the decline.
The ZEC discharge map shows that discharges from short areas predominate. This shows that many traders still expect the downward trend to continue.
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There have been several positive signs recently. Vitalik Buterin, the founder of Ethereum, has officially donated to Gasha Labs, a development team working on Zcash.
Buterin emphasizes that privacy is not optional. He describes it as a core blockchain infrastructure. This move could help revive positive sentiment for ZEC.
According to data from zkp.baby, more than 5 million ZEC are locked in the shield pool despite the steep discount. Negative news and widespread selling pressure do not seem to dampen investors' confidence in Zcash technology.
In general, the altcoin market has started to recover after a period of panic selling. Recent analyzes suggest that the total market capitalization could recover more than $2.8 trillion.
This broad recovery, coupled with asset-specific incentives, could push prices higher than short-sellers expect, increasing the likelihood of liquidity.
