3 altcoins face significant liquidation risks in the second week of February

After two consecutive weeks of sharp declines, buying pressure has returned to the market. However, this buying momentum is still not strong enough to completely dispel investor skepticism. Some altcoins are now showing distinct momentum, with the potential to drive a significant recovery this week, while also increasing the risk of asset liquidations.

Ethereum (ETH), Dogecoin (DOGE), and Zcash (ZEC) are forecasted to be the main factors that could trigger a liquidation wave totaling over $3.1 billion if traders do not properly assess the underlying risks.

Ethereum (ETH)

Recent 7-day liquidation data shows that ETH short positions are at a significantly higher risk of being liquidated compared to long positions.

Currently, many traders expect ETH to continue declining. Since mid-January, ETH has fallen about 40%. However, this bearish outlook is facing increasing risks.

Ethereum Liquidation Map | Source: Coinglass On-chain data reveals that only about 16 million ETH are stored on exchanges, the lowest level since 2024. Recent sell-offs have accelerated outflows from exchanges, sharply reducing the available ETH supply on the market. When supply decreases, the supply-demand imbalance could amplify the price recovery momentum.

Ethereum Reserves on Exchanges | Source: CryptoQuant Additionally, over 4 million ETH are currently in staking queues, further reducing circulating supply.

If ETH recovers strongly due to these factors, short sellers could face significant risks. Forecasts suggest that if ETH rises to $2,370 this week, total liquidation value from short positions could reach up to $3 billion.

Dogecoin (DOGE)

Dogecoin (DOGE) has now fallen below $0.10, hitting the lowest point in 2024. The 7-day liquidation data indicates that if DOGE recovers to $0.109 this week, short positions could be liquidated with a value of up to $98 million.

Dogecoin Liquidation Map | Source: Coinglass Analysts consider this scenario entirely plausible, based on both short-term and long-term technical structures.

In the short term, trader Tardigrade points out a Bull Flag pattern, a signal that suggests DOGE could rise to $0.12 this week.

From a long-term perspective, analyst Javon Marks emphasizes the formation of higher lows (HL) after higher highs (HH), indicating a strengthening bullish trend.

“If higher lows are maintained, Dogecoin could increase by over 640%, surpassing its current all-time high of around $0.73905,” Javon Marks predicts.

Additionally, Dogecoin may attract more community attention. In early February, billionaire Elon Musk responded to a question from Tesla Owners Silicon Valley about Dogecoin, which could boost renewed interest in the coin.

Zcash (ZEC)

Zcash (ZEC) has fallen more than 50% since January 8, following the announcement that the entire team of Electric Coin Company (ECC) — the core developer of Zcash — would be leaving the project. Overall negative market sentiment has also contributed to ZEC’s prolonged decline.

Liquidation data shows that ZEC short positions are dominant, reflecting widespread bearish expectations within the investor community.

ZEC Liquidation Map | Source: Coinglass However, some positive signals have recently emerged. Ethereum founder Vitalik Buterin publicly donated to Shielded Labs, a development team working on Zcash. Buterin emphasized that privacy is an essential element, considered a core part of blockchain infrastructure. This move could spark positive sentiment toward Zcash.

Moreover, according to data from zkp.baby, over 5 million ZEC are still locked in the Shielded pool despite the sharp price decline. This indicates that investor confidence in Zcash’s technology remains intact and is not significantly affected by negative news or sell pressure.

Overall, the altcoin market is gradually recovering after a panic sell-off phase. Recent analyses forecast that the total cryptocurrency market capitalization could surpass $2.8 trillion in the near future.

The market-wide recovery, combined with the individual momentum of specific assets, could push prices well beyond short sellers’ expectations, increasing the risk of mass liquidations.

Mr. Teacher