In the fourth week of July, the total cryptocurrency market capitalization reaches $4 trillion, marking a record-breaking moment. The altcoin market capitalization is also on the path to recovering its all-time high (ATH).
In this situation, several altcoins preferred by short-term traders using significant leverage may face major liquidations.
1. XRP
According to Coinglass, XRP's open interest—the total open position value in the derivatives market—reached a historical high of $10.9 billion in July.
Notably, the funding rate has turned positive, rising to its highest level since the beginning of the year. A positive funding rate occurs when futures prices exceed spot prices. This reflects strong market optimism, with most traders opening long positions expecting price increases.
This has resulted in an imbalance in XRP's liquidation map between long and short positions.
According to the 7-day liquidation map, the total cumulative liquidation of long positions far exceeds short positions. If XRP drops to $3 this week, long liquidations could reach nearly $1 billion.
These concerns have some basis. BeInCrypto recently reported warning signs of potential short-term adjustments for XRP, including a decrease in new investors.
However, according to Kaiko's latest report, XRP's 1% market depth reached an annual high of almost $10 million in the spot market. This is the second-highest level after ETH, surpassing SOL, BNB, and ADA.
This increased market depth and liquidity suggest that XRP could quickly recover if prices fall. However, sharp and unexpected price movements can pose significant risks to both long and short derivatives traders.
2. DOGE
In July, DOGE attracted high investor expectations. Particularly, Bit Origin plans to raise $500 million to establish a Dogecoin Treasury. Additionally, several indicators suggest the return of the meme coin season and the current altcoin season.
According to Coinglass data, DOGE's funding rate reached its annual high on July 21. When the price returned to $0.28, many short-term traders opened long positions expecting DOGE to continue rising.
As more traders use leverage to bet on DOGE's price increase, the risk of long liquidations increases.
Recently, Lookonchain reported that the famous hyperliquid trader James Win liquidated 4.45 million DOGE ($115,000) after closing his long trade.
At the time of writing, DOGE has dropped from July's high of $0.28 to $0.266. According to the 7-day liquidation map, if DOGE drops to $0.236 this week, total cumulative long liquidations could reach $300 million.
A recent BeInCrypto report mentions that long-term DOGE holders are quietly withdrawing funds, suggesting potential profit-taking.
3. ADA
Cardano (ADA) recorded a new all-time high of $1.74 billion in open interest in July. This occurred as ADA recorded price increases for five consecutive weeks.
Many analysts remain positive, predicting ADA will soon reach $1. On-chain indicators like Age Consumed and MVRV ratio suggest prices could continue rising in July.
According to the 7-day liquidation map, if ADA reaches $1, short positions could face up to $58 million in cumulative liquidations. However, the downside risk is larger. If ADA drops to $0.78 this week, cumulative long liquidations could reach $120 million.
Are there concerns that could negatively impact ADA's price? Possibly. News that Cardano co-founder Charles Hoskinson is preparing to publicly release an audit report could influence trader sentiment.
At the time of writing, total market open interest continues to increase, exceeding $213 billion. The cryptocurrency derivatives market is hotter than ever.
"In the past 24 hours, 152,419 traders were liquidated, with total liquidation amounts reaching $553.68 million." – Coinglass report.
Of the over $500 million liquidated in the past 24 hours, more than $370 million occurred in long positions. This raises concerns that this trend may continue in the fourth week of July.
