Positive sentiment is showing signs of returning to the cryptocurrency market in the first week of January, providing momentum for a recovery of altcoins. However, there are still many concerns about the sustainability of this upward trend.
Some altcoins may face significant liquidation risks as derivative data approaches dangerous levels that have previously caused sharp sell-offs in the past. So, which are the most prominent names?
Ethereum (ETH)
Ethereum (ETH) is receiving strong support from many positive factors this week. The number of ETH holders has surged; staking queues have far exceeded withdrawal queues; and on-chain transaction volumes have reached the highest in a decade.
As a result, traders have increased their capital and used high leverage for long positions, making the risk of potential long liquidation much higher than short positions.
ETH Liquidation Map | Source: CoinglassHowever, a concerning indicator has appeared: the estimated leverage ratio of ETH has hit a record high. This index reflects the average leverage level that traders are using, and a high value indicates that more investors are accepting greater risks when participating in derivatives trading.
Ethereum Estimated Leverage Ratio | Source: CryptoQuant.Long-term holders can leverage these positive factors to seek short-term profits. However, a sharp increase in leverage is a clear warning of the risk of a large-scale liquidation happening at any moment.
If ETH drops to the $2,800 zone this week, the total value of long positions at risk of liquidation could exceed $5.8 billion.
Bitcoin Cash (BCH)
Veteran investor Peter Brandt recently mentioned Bitcoin Cash (BCH) in his analysis, stating that it is approaching a key resistance level at $650, and a breakout here could open the door to higher prices.
Coinphoton’s report also points out many supporting factors for BCH’s bullish trend. Derivative traders are pouring significant leverage into long positions, indicating positive expectations.
BCH Liquidation Map | Source: CoinglassHowever, data from Coinglass shows that BCH’s open interest (OI) has reached $980 million – the highest level ever. Historically, whenever open interest exceeds $600 million, BCH often experiences strong and prolonged price corrections.
Currently, BCH is trading near the $650 resistance zone, increasing the risk of profit-taking pressure that could appear at any time.
BCH Open Contract Volume | Source: CoinglassIf BCH drops to the $570 level this week, the total value of long positions at risk of liquidation could exceed $80 million.
Pepe (PEPE)
The start of the year is seeing a strong shift of capital into meme coins, rekindling hopes for a new meme coin season. Optimistic forecasts, such as PEPE’s market capitalization potentially reaching $69 billion by 2026, further reinforce positive sentiment.
PEPE’s liquidation map shows that if the price drops to $0.00000613, the total value of long orders at risk of liquidation could exceed $15 million – roughly a 10% decrease from the current price.
PEPE Liquidation Map | Source: CoinglassThis scenario is entirely feasible, as PEPE has increased over 70% since the beginning of the year. Early investors are holding significant profits and may choose to take profits while skepticism still persists.
Additionally, technical analysts warn of a possible correction according to Elliott wave theory, suggesting PEPE may have completed its third wave of increase.
The cryptocurrency market is expected to continue experiencing high volatility in the coming days as geopolitical tensions escalate. If lessons are not learned from the mistakes that led to over $150 billion being liquidated in 2025, similar losses could very well recur in 2026.
Mr. Teacher
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