Falling exchange supply and renewed sentiment may amplify rallies beyond traders expectations.
After three consecutive weeks of sharp declines, buying pressure has returned to the market. However, it remains insufficient to dispel investor skepticism fully. Several altcoins now show unique catalysts that could drive outsized recoveries this week, increasing liquidation risks.
Ethereum (ETH), Dogecoin (DOGE), and Zcash (ZEC) could collectively trigger more than $3.1 billion in liquidations if traders fail to assess the following risks properly.
ETH’s 7-day liquidation map shows that potential liquidations from short positions outweigh those from long positions.
Many traders appear to expect further downside. ETH has already fallen about 40% since mid-January.
This bearish expectation faces growing risk. On-chain data shows that only around 16 million ETH remain on exchanges. This level marks the lowest since 2024.
Recent sell-offs have accelerated outflows from exchanges. Lower exchange balances reduce available supply. This dynamic can amplify price recoveries through supply-demand imbalances.
Additionally, more than 4 million ETH also sit in the staking queue. This further constrains the market’s liquid supply.
If ETH’s recovery strengthens due to these factors, short sellers could face significant risk. If ETH rises to $2,370 this week, potential liquidations from short positions could reach $3 billion.
Dogecoin (DOGE) has fallen below $0.10. This level matches its 2024 price low. The 7-day liquidation map shows potential short liquidations of up to $98 million if DOGE rebounds to $0.109 this week.
Analysts argue that such a scenario remains plausible given both short- and long-term structures.
In the short term, trader Trader Tardigrade points to a Bull Flag pattern. This setup suggests DOGE could move toward $0.12 this week.
From a longer-term perspective, analyst Javon Marks highlights the formation of Higher Lows (HL) following Higher Highs (HH). This structure signals strength.
“As Higher Lows hold, we could see Dogecoin climb over 640% to and above the current ATH levels at ~$0.73905,” Javon Marks projected.
Discussion around Dogecoin may also regain momentum. In early February, billionaire Elon Musk responded to a question from the Tesla Owners Silicon Valley account regarding Dogecoin.
Zcash (ZEC) has dropped about 50% since January 8. The decline followed the announcement that the entire Electric Coin Company (ECC) team, the core developer behind Zcash, would depart. Broader negative market sentiment has further prolonged the downturn.
ZEC’s liquidation map shows that potential liquidations from short positions dominate. This indicates that many traders still expect the downtrend to continue.
Several positive signals have emerged recently. Vitalik Buterin, the founder of Ethereum, publicly donated to Shielded Labs, a development group working on Zcash.
Buterin emphasized that privacy is not optional. He described it as core blockchain infrastructure. This action could help revive positive sentiment toward ZEC.
Data from zkp.baby shows that more than 5 million ZEC remain locked in the Shielded pool, despite the sharp price decline. Negative news and broader selling pressure appear not to have undermined investor confidence in Zcash’s technology.
Overall, the altcoin market has begun to rebound after a period of panic selling. Recent analyses suggest total market capitalization could recover above $2.8 trillion.
This broader recovery, combined with asset-specific catalysts, could push prices well beyond short sellers’ expectations, increasing the likelihood of liquidations.
