“Extreme fear” sentiment has returned to the market in the final week of January. This mood has led to short positions dominating. However, multiple data points suggest that several altcoins could trigger large-scale liquidations driven by their own specific factors.
This week, altcoins such as Ethereum (ETH), Chainlink (LINK), and River (RIVER) could collectively cause nearly $5 billion in liquidations. Here is why.
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1. Ethereum (ETH)
Ethereum’s 7-day liquidation map shows a severe imbalance between the potential cumulative liquidations of short positions and those of long positions.
Specifically, if ETH rebounds to $3,200 this week, short sellers could face liquidation losses exceeding $4.8 billion.
There are clear reasons for traders to be cautious. Analyst CW, using Ethereum Whale vs. Retail Delta data, indicates that whales have regained control of ETH over the past week. The metric has flipped from negative to positive and continues to rise sharply.
“Retail investors are being liquidated, while whales are increasing their long positions. The ones who suffer from this decline are retail investors. Whales will continue to instill fear until they give up,” analyst CW said.
A recent BeInCrypto report also shows that while ETH dropped below $3,000, many whales increased their accumulation. This behavior could fuel a rebound and inflict heavy losses on short positions.
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2. Chainlink (LINK)
Like ETH, LINK is also experiencing an imbalance on its liquidation map. Negative sentiment across the altcoin market in late January has pushed derivatives traders to allocate more capital and leverage into LINK short positions.
As a result, these traders would suffer larger losses if LINK recovers. If LINK rebounds to $13 this week, the total potential cumulative liquidation of short positions could exceed $40 million.
Meanwhile, exchange data shows that LINK reserves have hit a new monthly low in January, according to CryptoQuant. The chart indicates that despite falling prices, investors continue to accumulate LINK and withdraw it from exchanges. This behavior reflects long-term confidence in the asset.
In addition, data from the on-chain analytics platform Santiment identifies LINK as one of the undervalued altcoins following the recent market downturn.
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If accumulation pressure strengthens while prices decline, an unexpected rebound could occur. Such a move would increase liquidation risk for LINK short sellers this week.
3. River (RIVER)
River is a decentralized finance (DeFi) protocol that creates a chain-abstraction stablecoin system. It allows users to deploy collateral on one blockchain and access liquidity on another without using bridges or wrapped assets.
RIVER’s market capitalization has moved against the broader market and reached a new high above $1.6 billion. Just one month ago, its market cap was below $100 million.
This rapid surge has driven many traders into FOMO behavior. As a result, long positions now dominate, potentially leaving the long side with a significant liquidation value.
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If RIVER moves against expectations and drops below $60 this week, long positions could suffer liquidation losses of up to $35 million.
Is this scenario possible? On-chain data provides several warning signals. Etherscan data shows that the top five River wallets control more than 96.6% of the total supply, indicating extreme concentration.
“Its controlled by insiders, that’s the tweet. Keep manipulating. It started with MYX, COAI, AIA and ended up at almost zero. Be cautions,” investor Honey said.
While some investors remain confident that RIVER will soon reach $100, others have begun to express doubt and fear a price reversal. Such a reversal could trigger significant liquidation risk for RIVER long positions.
These altcoins illustrate different market dynamics in the altcoin space at the end of January. Analysts broadly agree that the altcoin market is becoming more selective. Only assets that attract institutional interest are likely to sustain capital inflows and long-term growth.