3 Altcoins Face High Liquidation Risk in the Final Week of January

“Extreme fear” sentiment has returned to the market in the final week of January. This mood has led to short positions dominating. However, multiple data points suggest that several altcoins could trigger large-scale liquidations driven by their own specific factors.

This week, altcoins such as Ethereum (ETH), Chainlink (LINK), and River (RIVER) could collectively cause nearly $5 billion in liquidations. Here is why.

1. Ethereum (ETH)

Ethereum’s 7-day liquidation map shows a severe imbalance between the potential cumulative liquidations of short positions and those of long positions.

Specifically, if ETH rebounds to $3,200 this week, short sellers could face liquidation losses exceeding $4.8 billion.

ETH Exchange Liquidation Map. Source: Coinglass

There are clear reasons for traders to be cautious. Analyst CW, using Ethereum Whale vs. Retail Delta data, indicates that whales have regained control of ETH over the past week. The metric has flipped from negative to positive and continues to rise sharply.

Ethereum Whale vs Retail Delta. Source: Coinglass

“Retail investors are being liquidated, while whales are increasing their long positions. The ones who suffer from this decline are retail investors. Whales will continue to instill fear until they give up,” analyst CW said.

A recent BeInCrypto report also shows that while ETH dropped below $3,000, many whales increased their accumulation. This behavior could fuel a rebound and inflict heavy losses on short positions.

2. Chainlink (LINK)

Like ETH, LINK is also experiencing an imbalance on its liquidation map. Negative sentiment across the altcoin market in late January has pushed derivatives traders to allocate more capital and leverage into LINK short positions.

As a result, these traders would suffer larger losses if LINK recovers. If LINK rebounds to $13 this week, the total potential cumulative liquidation of short positions could exceed $40 million.

LINK Exchange Liquidation Map. Source: Coinglass

Meanwhile, exchange data shows that LINK reserves have hit a new monthly low in January, according to CryptoQuant. The chart indicates that despite falling prices, investors continue to accumulate LINK and withdraw it from exchanges. This behavior reflects long-term confidence in the asset.

LINK Exchange Reserve. Source: CryptoQuant.

In addition, data from the on-chain analytics platform Santiment identifies LINK as one of the undervalued altcoins following the recent market downturn.