Why These 3 Altcoins Could Cause Massive Liquidations This Week

The crypto market enters the first week of February in an intensifying battle between bulls and bears. The bears still hold the advantage, but the bulls seem to be seeing an opportunity. This situation makes price volatility more complicated. Liquidity losses are increasing for both long and short positions.

Why should altcoins like Solana (SOL), Hyperliquid (HYPE) and Tron (TRX) be closely watched? The next topic will explore the details.

1. Solana (Sun)

In early February, SOL briefly dipped below $100 amid market-wide negative pressure.

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A 7-day discharge temperature map shows that discharges from shorter areas predominate. Used short-term traders seem convinced that SOL can go deeper.

However, the price around $100 has placed SOL at the most important support zone of the last two years. Taking advantage of major support levels and capitalizing on shorting often comes with significant risk.

The latest BeCrypto analysis shows a significant increase in new Solana addresses in January. More than 10 million new addresses were being created every day.

In addition, several emerging factors can support recovery. These include the growth of users from meme coin launch boards, the expansion of the USD1 stablecoin, and SOL joining the privacy trend through GhostSwap.

Selling pressure led by overall negative sentiment is now clashing with Solana's own bullish impulses around the $100 level. This conflict can lead to sharp wick movements. Both long and short traders may experience liquidation losses.

According to CoinGlass data, if SOL recovers above $113 this week, short liquidity could reach $500 million. On the other hand, if SOL continues to fall to $86, long positions could suffer more than $142 million in liquidity.

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2. HYPE

HyperLiquid (HYPE) is one of the few altcoins that managed to maintain a 50% rally since January 21st. Most other altcoins have been setting new lows.

The HYPE Liquidity Chart shows a relatively balanced situation between Longs and Shorts. At current prices around $31, a trip to $35.50 could trigger nearly $80 million in short liquidity. A drop to $26 could wipe out about $80 million in long positions.

HYPE's ability to rise above the broader market trend already represents risk. BeinCrypto reports also indicate strong capital inflows, but the market lacks sufficient liquidity to sustain its recovery.

On the other hand, HYPE has its incentives. These include a 90% discount on monthly group bookings. Interest in trading metal pairs on Hyperliquid supported the value of the token.

Bulls and bears have been neutral from each other. Over the past four days, HYPE has formed a series of rotating bullish candlestick patterns. This type of arrangement often indicates that high inflation is imminent, increasing liquidity risk.

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3. TRX

Recently, a woman named Ten Ten (Zheng Ying), who claims to be Justin Sun's ex-girlfriend, accused him of exploiting the TRON (TRX) market in its infancy. She revealed that Sun ordered its employees to register multiple Binance accounts under personal IDs to carry out coordinated trading activities.

These developments may spread negative sentiment among TRX holders, especially amid a wave of panic selling.

Short-term traders play on further decline. A fluid temperature map shows that potential short fluids dominate. If TRX rises above $0.31, these could reach $29 million.

However, other signs suggest that demand for TRX is also strengthening. Tron Inc. (NASDAQ: TRON ) recently bought an additional 173,051 TRX tokens at an average price of $0.29. The company's total TRX reserves now exceed 679.2 million TRX.

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The number of weekly active addresses on Tron has also grown steadily over the years. Currently it is 24.68 million. This indicates that demand for TRX has been supported even during a broader market downturn.

Short sellers may take short-term profits but negative sentiment will prevail. Without a clear profit-making plan, however, these benefits can quickly disappear.

Each of these altcoins has its own narrative. However, as market volatility increases, the risk of withdrawal increases significantly for both long- and short-term traders.

“Total crypto liquidity has officially surpassed $5 billion in the past 4 days, marking the largest wave of liquidity since October 10.” – Kobeisi's letter reported.

As liquidation losses mount, retail investors may lose capital to sustain buying pressure. This could push the market into a long cooling phase.