The cryptocurrency market is entering a pivotal phase as December unfolds, with extreme fear dominating market sentiment. Derivatives markets reveal significant liquidation imbalances for three major altcoins: Ethereum (ETH), Solana (SOL), and Ripple’s XRP. Could these altcoins trigger one of the largest liquidation events of the year? Let’s dive into the details.
Ethereum (ETH): Market Scarcity Points to a Potential Rebound
ETH’s liquidation map over the last seven days shows a staggering imbalance between short and long positions. Traders aggressively shorting Ethereum could face over $4 billion in liquidations if the price rebounds to $3,150 this week.
One key factor supporting a potential rally is Ethereum’s supply on exchanges, which has hit an all-time low of 16.6 million ETH. Removing ETH from exchanges reflects ongoing accumulation, potentially amplifying scarcity and reducing selling pressure. According to CryptoQuant data, this trend of reduced supply could trigger an explosive recovery in ETH prices.
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Solana (SOL): Driving Industry Transactions
Similar to Ethereum, Solana’s liquidation map indicates significant short activity, with a potential liquidation volume of $1 billion if its price rebounds to $145. On-chain metrics support SOL’s growth, with blockchain analysis firm Nansen showing that Solana consistently leads the industry in weekly transaction counts.
Investor optimism is also surging, with projections anticipating a price range of $150-$200 by month’s end. Additionally, US-based Solana ETFs have seen five consecutive weeks of inflows, indicating strong institutional interest. These positive fundamentals hint at a possible price correction favoring Solana bulls.
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Ripple’s XRP: Poised for a Breakout
Ripple’s XRP liquidation metrics also show short traders dominating the market. Should XRP surpass $2.30 in the coming days, over $500 million in short positions could be wiped out. Analysts predict that XRP could climb even further to $2.60 this month, creating a significant risk for bearish traders.
One notable driver is the expansion of the stablecoin market. Data from Coinglass indicates that the combined market cap of major stablecoins (USDT, USDC, DAI, and FDUSD) has risen to $267.5 billion as of early December, reversing a four-week decline. This influx of stablecoins could inject fresh liquidity into the broader cryptocurrency market, benefiting XRP and other altcoins alike.
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What This Means for the Market
The combined potential liquidation volume from these three altcoins stands at an impressive $5.5 billion. If a market rebound materializes, it could set a new record for liquidation events in 2025. To navigate these volatile conditions, investors should carefully monitor on-chain data, market sentiment, and macroeconomic trends.
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