Market sentiment shifted into extreme fear on December 1. Short positions are dominating the derivatives market. Several major altcoins are exhibiting severe imbalances in their liquidation maps, which could trigger a new record in liquidations.
The following analysis highlights the underlying factors that could cause the market to deviate from short-term expectations in the first week of December.
1. Ethereum (ETH)
ETH’s 7-day liquidation map shows that cumulative liquidation volume from short positions significantly outweighs that of long positions. This indicates that traders are aggressively shorting ETH.
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If ETH rebounds to $3,150 this week, cumulative short liquidations could exceed $4 billion.
ETH Exchange Liquidation Map. Source: CoinglassWhat risks should short sellers consider? On-chain data on ETH exchange balances may be an important signal.
CryptoQuant data shows that ETH supply on exchanges has dropped to an all-time low of 16.6 million ETH. The trend of withdrawing ETH from exchanges has accelerated over the past month, despite ETH’s price decline.
Ethereum Exchange Reserve. Source: CryptoQuantAlthough many analyses suggest further downside, the ongoing accumulation, reflected in falling exchange supply, could soon amplify scarcity as selling pressure weakens. This could trigger a sudden recovery in ETH.
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2. Solana (SOL)
Similar to ETH, SOL shows a clear imbalance in its liquidation map. Traders have been actively shorting SOL in early December.
If SOL rebounds to $145 this week, cumulative short liquidations could surpass $1 billion.
SOL Exchange Liquidation Map. Source: CoinglassIs there a basis for SOL to recover this week? On-chain indicators are reflecting positive signals. Nansen reported that Solana continued to lead in transaction count during the week.
On prediction markets, many investors still expect a price range of $150–$200 in December. Additionally, US-based SOL ETFs have experienced five consecutive weeks of inflows.
Recently, BitMEX co-founder Arthur Hayes also stated that only Ethereum and Solana have the institutional use cases necessary for long-term survival.
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3. XRP
XRP’s 7-day liquidation map indicates that short activity is dominant. If XRP rebounds above $2.30 this week, cumulative short liquidations could exceed $500 million.
XRP Exchange Liquidation Map. Source: CoinglassShort sellers should consider several factors.
With these drivers, many analysts predict that XRP could reach $2.6 this month. Such a move would severely impact short sellers.
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Rising Stablecoin Supply Signals a Possible Market Rebound
Another factor worth considering is the renewed expansion in stablecoin supply.
Coinglass data shows that the combined market cap of USDT, USDC, DAI, and FDUSD reached a new high of $267.5 billion at the start of December.
Total Stablecoin Market Cap (USDT, USDC, DAI, and FDUSD). Source: CoinglassThe rising stablecoin supply suggests that market liquidity may increase this month. Analyst Ted noted that this uptrend ends a four-week decline in stablecoin market cap.
The three major altcoins mentioned above account for a combined $5.5 billion in potential liquidation volume if the market rebounds unexpectedly.
If a genuine recovery occurs, a new record for liquidation may be set. Investors may need to consider all these factors to minimize risks to their positions.
Source: https://beincrypto.com/3-altcoins-that-could-trigger-a-liquidation-record/
