Why XRP, DOGE, TAO May Cause Liquidity Risks This Week
The crypto market entered the third week of February. However, overall negative sentiment has yet to improve, creating possible liquidity conditions among over-optimistic traders.
Altcoins such as XRP, DOGE and TAO are attracting attention this week due to significant developments, but they also carry the following risks.
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1. XRP
The XRP liquidity map shows that the cumulative liquidity of long positions is slightly higher than that of short positions.
This week, if XRP drops to $1.30, cumulative long liquidity could exceed $200 million. Conversely, if XRP rises above $1.63, cumulative short liquidations could reach $150 million.
On Sunday, XRP briefly rose to $1.66 before quickly falling below $1.50 on Monday. Analyst Dom identified selling pressure originating from the Upbit exchange on the XRP spot cumulative volume delta indicator.
According to the data, about 50 million XRP was sold on the net by Upbit in 15 hours, creating a strong selling pressure. The pressure comes ahead of the Lunar New Year's Eve, a holiday in many Asian countries that often raises fears of liquidity shortages.
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Meanwhile, XRP holds high trading volume on both Upbit and Bithumb in South Korea. As a result, selling pressure from Asian investors could threaten long positions this week.
2. Dogecoin (DOGE)
Recent bullish discussions in the community have encouraged traders to allocate capital to LONG DOGE positions this week.
If DOGE falls to $0.091, cumulative long liquidity could be close to $90 million. Meanwhile, if DOGE rises to $0.114, cumulative short liquidations could total around $53 million.
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Why should DOGE long traders be careful? Data from Nansen shows that DOGE's exchange rates (yellow line) have suddenly risen since February 12, when DOGE started to recover, fueled by rumors of the upcoming launch of X Money.
It appears that many DOGE investors are using the recovery as an opportunity to exit positions by transferring tokens to exchanges. If this trend continues this week, DOGE may adjust and move to long positions to liquidity levels.
3. Bittensor (TAO)
TAO's listing on South Korea's Apbit exchange on February 16 may provide a new impetus to support a price recovery.
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The liquidity map shows that if TAO rises above $283 this week, short liquidations could exceed $13 million. Conversely, long liquidation could reach $11.5 million if TAO drops to $160.
Analyst Michael van de Pop expects a strong recovery as the crypto community's discussions around AI continue to occupy a large share of the overall market's attention and Bittensor (TAO) adjusts to a long-term support zone.
“I think protocols that work on AI crypto should be in every portfolio and I'm happy to add funds to this space. I think we'll see more strength from here. At least on average to ~$300,” said Michael van de Pop.
New funding from Upbit combined with Michael van de Popp's review could put TAO short positions at risk.
