Why Traders Should Be Cautious About These 3 Altcoins

The altcoin market enters the second week of January with unclear signals. Some tokens have reached new all-time highs. Others have recovered amid skepticism. Most altcoins continue to struggle to recover from the heavy sell-off that occurred in October last year.

In that context, three altcoins face a high risk of large liquidations because traders may be misjudging real market demand.

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1. Solana (SOL)

The early 2026 meme-coin wave is not extremely strong, but it indicates that traders are becoming more open to risk. The Solana ecosystem has posted several new records. Pump.fun’s DEX volume has hit a new all-time high. The number of meme tokens deployed each day has also surged.

As a result, many traders continue to expect SOL to rise during the rest of January. This optimism appears in liquidation data, where potential cumulative liquidations on long positions far exceed those on short positions.

However, traders may be overestimating this demand. Santiment data shows that the number of new wallets created each week reached 30.2 million in November 2024. That figure has now fallen to 7.3 million.

The chart shows that SOL’s rally has been closely tied to weekly new-wallet growth. The sharp decline in this metric weakens the fundamental basis of the early-year rebound.

A recent BeInCrypto report also noted that SOL has recovered, with institutional capital flowing into the ecosystem. However, retail investors remain largely absent. This group was a critical driver of SOL’s explosive rallies in the past.

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If long traders keep chasing positions without tight stop-loss plans, they could face nearly $1 billion in liquidations. This would happen if SOL falls back to the $132 area this week.

2. Monero (XMR)

Discussions about Monero (XMR) in the crypto community have turned more positive than ever. XMR has set a new all-time high today. At the same time, its rival Zcash (ZEC) has dropped sharply as confidence weakens.

The seven-day liquidation heatmap shows that potential cumulative liquidations on long positions dominate those on short positions. XMR long traders should remain cautious this week for two main reasons.

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First, XMR has reached a new high while also touching a strong resistance trendline that has remained in place since 2018. This creates heavy selling pressure from holders who are sitting on large profits.

Second, Coinglass data shows that XMR open interest has surged by nearly $180 million. This marks the highest level in history.

Traders are therefore adding capital and leverage right as XMR hits a major resistance zone. This behavior carries a very high risk. If XMR pulls back to $454 this week, long traders could face more than $20 million in liquidations.

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3. Render (RENDER)

Render (RENDER) has risen more than 90% since the start of the year. Data from Artemis shows that not only RENDER, but also other AI coins, have posted strong gains. This has made the AI sector the best-performing segment of the crypto market so far this year.

Investors appear to be favoring AI coins in early 2026. This sentiment could allow RENDER and other AI tokens to continue rising after they reach short-term balance.

The seven-day liquidation map for RENDER shows a relatively balanced expectation between long and short positions.

If AI coins keep attracting capital this week, RENDER short traders could face up to $5.8 million in liquidations. This would occur if RENDER climbs to $2.93.