Market volatility in the first week of March has been making waves due to unexpected announcements from President Trump. The news of involving altcoins in US crypto reserves and new tax policies has caused a surge in liquidation volume, reaching a whopping $1 billion.
Altcoin liquidation maps are showing signs of imbalance, hinting at the potential for significant liquidations on the horizon.
XRP (XRP):
Recent data on XRP's 7-day liquidation heatmap suggests that if the price dips below $2, total long liquidations could soar over $215 million, with traders currently leaning towards long positions. Despite a 20% decline, XRP is holding steady at around $2.33 after the recent events.
Whale Alert revealed that 500 million XRP was released from escrow shortly after the declaration by President Trump mentioning XRP's inclusion in the US crypto reserve. Moreover, Ripple co-founder Chris Larsen still holds a substantial amount of XRP, moving significant sums to exchanges, raising concerns for a potential liquidation event.
Solana (SOL):
The 7-day liquidation heatmap for Solana indicates the possibility of long liquidations exceeding $437 million if SOL drops to $120 from its current price of $136.3. Recent on-chain movements of SOL from a wallet linked to FTX/Alameda to Binance have further fueled speculations of selling pressure leading to more liquidations.
Cardano (ADA):
ADA's 7-day liquidation heatmap suggests that short liquidations might surpass $50 million if ADA breaches $0.90, representing a 10% surge from its current price of $0.81. Despite having lower liquidation volume compared to XRP or SOL, ADA is deemed the most volatile, with weaker market depth according to recent reports, potentially magnifying price impacts in the face of market shocks.
These developments underscore the high sensitivity of the current market, accentuating risks for short-term traders, particularly those leveraging high volumes. As liquidation maps adapt to ongoing price shifts, the unpredictable nature of recent news emphasizes the need for cautious trading strategies.