Three Altcoins Face Major Liquidation Risk This Week

The cryptocurrency market has reached unprecedented heights with total market capitalization hitting $4 trillion in the fourth week of July. While altcoin market cap approaches its all-time high, several popular altcoins face significant liquidation risks due to excessive leverage trading.

XRP Liquidation Risk Reaches Critical Levels

XRP has emerged as a major concern for crypto derivatives markets. Open Interest for XRP hit an all-time high of $10.9 billion in July, according to market data. The dramatic surge in trading positions has created an imbalanced liquidation map between long and short positions.

Record-High Funding Rates Signal Danger

The Funding Rate for XRP turned positive and climbed to its highest level since the year began. This positive funding rate occurs when future prices exceed spot prices, reflecting strong market optimism as most traders expect price increases and open long positions.

Billion-Dollar Liquidation Risk

Analysis of the 7-day liquidation map reveals concerning data. Total cumulative liquidation for long positions significantly exceeds short positions. If XRP drops to $3 this week, long liquidations could reach nearly $1 billion.

Recent warning signs suggest a possible short-term correction for XRP, including declining new investor activity. However, XRP's 1% market depth reached a new yearly high of nearly $10 million on the spot market, placing it above SOL, BNB, and ADA, second only to ETH.

The increased market depth and liquidity suggest XRP may recover quickly from price drops. Nevertheless, rapid and unexpected price movements could put both long and short derivatives traders at significant risk.

DOGE Faces Mounting Leverage Pressure

Dogecoin has attracted high investor expectations in July, particularly as Bit Origin plans to raise $500 million to establish a Dogecoin treasury. Several indicators suggest a possible return of meme coin season alongside the ongoing altcoin season.

Peak Funding Rates Indicate Overleveraging

Market data shows DOGE's Funding Rate hit a yearly high on July 21 when the price returned to $0.28. Many short-term traders opened long positions, expecting DOGE to continue rising.

The risk of long liquidations increases as more traders use leverage to bet on DOGE's price surge. Notable trader James Wynn recently liquidated part of his position for 4.45 million DOGE worth $1.15 million after closing his long trade.

$300 Million Liquidation Threshold

At current levels, DOGE has fallen from its July high of $0.28 to $0.266. The 7-day liquidation map shows that if DOGE drops to $0.236 this week, total cumulative long liquidations could reach $300 million.

Long-term DOGE holders are quietly withdrawing funds, signaling potential profit-taking behavior that could accelerate price declines.

ADA Approaches Critical Price Levels

Cardano reached a new all-time high in open interest during July at $1.74 billion. This milestone comes as ADA enters its fifth consecutive week of price gains.

Bullish Sentiment Creates Risk

Many analysts remain bullish, predicting ADA could soon hit $1. On-chain metrics such as Age Consumed and the MVRV Ratio suggest the price may continue climbing in July.

Dual-Direction Liquidation Risk

The 7-day liquidation map reveals dual risks for ADA traders. If ADA hits $1, short positions could face up to $58 million in cumulative liquidations. However, the downside risk proves even greater. If ADA falls to $0.78 this week, cumulative long liquidations could reach $120 million.

Potential concerns include news that Cardano co-founder Charles Hoskinson is preparing to publicly release an audit report, which could impact trader sentiment.

Market-Wide Liquidation Concerns

Overall market Open Interest continues rising, surpassing $213 billion. The crypto derivatives market has reached unprecedented activity levels.

In the past 24 hours, 152,419 traders were liquidated, with total liquidations amounting to $553.68 million. Of the more than half billion dollars liquidated, over $370 million came from long positions.

This trend raises concerns about continued liquidations throughout the fourth week of July as leveraged positions remain vulnerable to sudden market movements.

Key Takeaways for Traders

The current market environment presents both opportunities and significant risks. While altcoin prices have surged, the excessive leverage in derivatives markets creates potential for massive liquidations across XRP, DOGE, and ADA.

Traders should monitor critical price levels and consider position sizing carefully as market volatility could trigger cascading liquidations worth billions of dollars across these three major altcoins.

For more Crypto, Web3, Blockchain & AI news visit : www.metamoonmedia.com