Over the past 4 days, liquidations have exceeded $5 billion, reaching a new high since October. SOL fell below $100, then rebounded to $113, with short positions liquidated for $500 million. HYPE triggered $80 million in liquidations on both sides at $31. TRX faced manipulation allegations but the Tron network increased holdings against the trend. Retail buying power weakened, and stagnation risks increased.
SOL’s $100 Support Becomes a $500 Million Liquidation Battlefield
(Source: Coinglass)
In early February, due to overall market downward pressure, Solana (SOL) briefly fell below $100. Not only is $100 a psychological barrier, but it’s also the most critical support zone over the past two years. Increasing leverage to short at key support levels usually comes with significant altcoin liquidation risks. The 7-day liquidation heatmap shows that potential liquidations of short positions dominate, indicating leveraged short traders are confident that SOL’s price may further decline.
Data from CoinGlass shows that if SOL rebounds above $113 this week, potential short liquidations could reach as high as $500 million. This staggering figure indicates many traders have built high-leverage short positions near $100. When the price suddenly rebounds, these shorts will be forced to cover (buy), creating chain buying pressure that could accelerate the price upward, resulting in a short squeeze.
Conversely, if SOL continues to fall toward $86, long position liquidations could exceed $142 million. The massive asymmetry in liquidation amounts ($500 million vs. $142 million) reveals a core market structure: excessive short crowding. Recent BeInCrypto analysis shows that in January, the number of new Solana addresses surged, with over 10 million new addresses daily. This on-chain activity divergence from falling prices may indicate undervaluation.
Additionally, some emerging factors could aid recovery. These include user growth from meme coin platforms, expansion of USD1 stablecoins, and SOL’s integration into privacy trends via GhostSwap. Overall, selling pressure driven by pessimism conflicts with Solana’s own bullish catalysts near $100. This conflict could lead to sharp price swings, with both longs and shorts facing altcoin liquidation risks.
HYPE’s Dual-Sided Liquidation and the Dangerous Standoff
(Source: Coinglass)
Hyperliquid (HYPE) is one of the few cryptocurrencies that has maintained a 50% gain since its bottom on January 21. Most other cryptocurrencies continue to hit new lows. This countertrend performance makes HYPE one of the most intense battlegrounds for longs and shorts. Its liquidation chart shows a relatively balanced holding between both sides. Currently near $31, if it rises to $35.5, about $80 million in short liquidations could be triggered. If it drops to around $26, about $80 million in long liquidations could occur.
This symmetrical two-way liquidation scenario is extremely rare. Usually, markets show a clear bias, with asymmetric liquidation amounts. HYPE’s balanced structure suggests both sides have built large leveraged positions, each believing they are correct. This deadlock is highly unstable; once the price breaks either way, it will trigger chain liquidations, causing rapid price movements.
HYPE’s ability to rise against the trend itself poses altcoin liquidation risks. BeInCrypto reports that HYPE faces significant capital outflows, and market liquidity is insufficient to sustain a continued rebound. This fundamental-price divergence is typically unsustainable. Either fundamentals improve to catch up with the price, or the price corrects downward to reflect overvaluation.
On the other hand, HYPE has its own catalysts. These include a 90% monthly reduction in team allocations, significantly easing concerns over team dump pressure. Additionally, demand for precious metals trading pairs on the Hyperliquid platform supports the token’s price. When gold and silver surge, platforms offering precious metals trading naturally benefit.
Long and short positions are evenly matched. Over the past four days, HYPE has shown multiple spinning top candlestick patterns. These candlestick formations often indicate imminent large price swings, increasing altcoin liquidation risks. Spinning tops show a balance of buying and selling forces, both probing each other’s bottom lines; once this equilibrium breaks, the price will move sharply.
TRX Scandal Amidst Contrarian Accumulation
(Source: Coinglass)
Recently, a woman claiming to be the ex-girlfriend of TRON founder (alias Zeng Ying) accused him of market manipulation during TRON (TRX)’s early stages. She stated that the founder instructed employees to register multiple Binance accounts under personal identities to coordinate trading activities. These developments could spread negative sentiment among TRX holders, especially amid panic selling waves.
Short-term traders are betting on further declines. The liquidation heatmap shows that potential short liquidations dominate. If TRX rebounds above $0.31, these liquidations could approach $29 million. While this is less than SOL’s $5 billion, it remains a significant altcoin liquidation risk relative to TRX’s market cap.
However, other signs indicate increasing demand for TRX. Tron (NASDAQ: TRON) recently accumulated 173,051 TRX tokens at an average price of $0.29 per token. The company’s total TRX reserves now exceed 679.2 million tokens. This contrarian accumulation suggests insiders are unconcerned about manipulation allegations or believe the current price is undervalued.
Over the years, Tron’s weekly active addresses have steadily increased, now reaching 24.68 million. This indicates that even amid overall market declines, TRX demand remains strong. Active address growth is a healthy ecosystem indicator, reflecting ongoing usage in stablecoin transfers and DeFi applications.
Short sellers might profit from prevailing market pessimism in the short term. However, without a clear profit-taking plan, these gains could quickly evaporate.
Comparison of the Three Major Altcoin Liquidation Risks
SOL: Short liquidations $500 million (at $113), Long liquidations $142 million (at $86), Excessive short crowding
HYPE: Both sides $80 million, Fully balanced, Most prone to sharp volatility
TRX: Short liquidations $29 million (at $0.31), Scandal-plagued but accumulating against the trend
Retail Buying Power Dwindles, Risking Market Stagnation
Each altcoin has its own story. However, as market volatility continues to expand, the liquidation risks for both longs and shorts are rising sharply. Entering the first week of February, the battle between bulls and bears has intensified. Shorts still hold the advantage, but bulls see opportunities. This situation makes price swings more complex, with increasing liquidation losses on both sides.
As liquidation losses grow, retail investors may lack sufficient funds to sustain buying pressure. This could lead to a prolonged market stagnation. Over the past 4 days, total liquidations have officially exceeded $50 billion, the largest liquidation wave since October 10. Such losses imply a large amount of capital permanently leaving the market; these liquidated traders are unlikely to return in the short term.
The risk of market stagnation lies in forming a negative feedback loop. Liquidations cause capital outflows, weakening buying support, which leads to further price declines, triggering more liquidations. If this cycle persists, the altcoin market could enter a long-term bear market.
