The fourth week of July marks a record-breaking moment as the total crypto market capitalization reaches $4 trillion. Altcoin market cap is also on a path toward reclaiming its all-time high (ATH).
In this context, several altcoins, highly favored by short-term traders using significant leverage, may face major liquidations.
1. XRP
According to Coinglass, XRP’s Open Interest—the total value of open positions in the derivatives market—hit an all-time high of $10.9 billion in July.
Notably, the Funding Rate turned positive and climbed to its highest level since the start of the year. A positive Funding Rate occurs when the future price exceeds the spot price. This reflects strong market optimism, as most traders expect the price to rise and are opening long positions.
This has caused XRP’s liquidation map to become imbalanced between long and short positions.
According to the 7-day liquidation map, the total cumulative liquidation for long positions far exceeds that of short positions. If XRP drops to $3 this week, long liquidations could reach nearly $1 billion.
This concern has some basis. BeInCrypto recently reported warning signs of a possible short-term correction for XRP, including a decline in new investors.
However, Kaiko’s latest report shows that XRP’s 1% market depth reached a new yearly high of nearly $10 million on the spot market. This places it above SOL, BNB, and ADA, second only to ETH.
This increased market depth and liquidity suggest that XRP may recover quickly if the price drops. Still, rapid and unexpected price swings could put both long and short derivatives traders at significant risk.
2. DOGE
DOGE has drawn high investor expectations in July, especially as Bit Origin plans to raise $500 million to establish a Dogecoin treasury. Additionally, several indicators hint at a possible return of meme coin season alongside the ongoing altcoin season.
Coinglass 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, hoping DOGE would continue rising.
The risk of long liquidations increases as more traders use leverage to bet on DOGE’s price surge.
Recently, Lookonchain reported that well-known Hyperliquid trader James Wynn liquidated part of his position, for 4.45 million DOGE ($1.15 million) after closing his long trade.
At the time of writing, 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.
A recent BeInCrypto report notes that long-term DOGE holders are quietly withdrawing funds, signaling potential profit-taking.
3. ADA
Cardano (ADA) reached a new all-time high in open interest in July, at $1.74 billion. This comes as ADA enters its fifth consecutive week of price gains.
Many analysts remain bullish, predicting that ADA could soon hit $1. On-chain metrics such as Age Consumed and the MVRV Ratio suggest the price may continue climbing in July.
According to the 7-day liquidation map, if ADA hits $1, short positions could face up to $58 million in cumulative liquidations. However, the downside risk is even greater. If ADA falls to $0.78 this week, cumulative long liquidations could reach $120 million.
Is there any cause for concern that might negatively affect ADA’s price? Possibly. News has emerged that Cardano co-founder Charles Hoskinson is preparing to publicly release an audit report, which could impact trader sentiment.
At the time of writing, overall market Open Interest continues to rise, surpassing $213 billion. The crypto derivatives market has never been hotter.
“In the past 24 hours, 152,419 traders were liquidated, with total liquidations amounting to $553.68 million,” Coinglass reported.
Of the more than half a billion dollars liquidated in the past 24 hours, over $370 million came from long positions. This raises concerns that the trend may continue into the fourth week of July.
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