3 Altcoins could trigger a major liquidation wave in early January

Short-term derivatives traders are currently maintaining long positions on some altcoins at the end of December. However, without a strict stop-loss strategy, these positions are at risk of liquidation starting from January.

So, which altcoins are potentially risky, and why could they cause significant losses due to liquidation? The analysis below will clarify this issue.

Solana (SOL)

The 7-day liquidation map of Solana shows a serious imbalance between long and short positions, with liquidations of long positions exceeding those of short positions.

Traders have reasonable grounds to continue holding SOL at this time. According to Coinphoton’s report, January is usually a strong growth period for SOL. Additionally, the RSI divergence indicator pointing upward has reinforced expectations of a recovery.

SOL Liquidation Map | Source: Coinglass In the coming days, long positions may realize unrealized profits. However, without a clear take-profit plan, these positions will become more vulnerable to market volatility.

Data from SoSoValue shows that SOL ETF funds have just recorded the lowest capital inflow since launch, with last week’s net cash flow only reaching $13.14 million, down more than 93% compared to nearly $200 million in the first week. Although no week has recorded negative cash flow, this sharp decline is a clear signal that ETF demand for SOL is weakening. This trend could put downward pressure on SOL’s price right from the beginning of January.

Total net inflow into spot SOL ETF | Source: SoSoValue Therefore, long positions need to be managed carefully. If SOL drops to $110, the total value of liquidated long positions could exceed $880 million.

Zcash (ZEC)

Similar to SOL, the ZEC liquidation map shows traders concentrating capital and using high leverage on long positions.

The amount of ZEC locked in Shielded Pools has increased again at the end of December, along with a strong recovery in price from around $300 to over $500. These factors support a holding strategy for long positions.

ZEC Liquidation Map | Source: Coinglass However, risks may arise if traders become overly optimistic. After a price increase of over 70% in December, ZEC may undergo a technical correction. The price returning to test old resistance levels as support is a normal market behavior.

Profit-taking pressure from investors who bought in early December could accelerate this correction, creating liquidation risks for long positions.

Additionally, a new report from Coinphoton shows that ZEC whales are reducing their holdings, reflecting a cautious sentiment after the strong recovery phase.

If ZEC drops to around $466 in early January, the total liquidation value of long positions could exceed $78 million.

Chainlink (LINK)

Many traders are betting on LINK’s recovery from the current $12 level, with significant capital and leverage poured into long positions.

According to CryptoPulse: “LINK is holding steady in the demand zone and beginning to stabilize. If this support holds, the price could target levels of $13.5 – $14 – $15. However, if it breaks below $11.5, the bullish trend will be invalidated, and downside risk will emerge.”

LINK Liquidation Map | Source: Coinglass An important signal to monitor is the continuous increase in LINK reserves on Binance throughout December. Data from CryptoQuant shows that the 7-day average reserve of LINK on Binance has reversed upward after two months of decline.

Source: CryptoQuant This indicates that LINK investors may be preparing to sell as the price shows signs of recovery. According to the liquidation map, if LINK drops to $11, the total value of buy positions liquidated could reach around $40 million.

In summary, although these altcoins are still attracting significant trader interest, liquidation risks remain if the market reverses. Developing a risk management and profit-taking strategy is essential during this highly volatile period at the start of the year.