The positive sentiment seems to be returning to the markets in the first week of January, which supports the recovery of altcoins. The question, however, is whether this recovery can continue for a longer period.
The derivative data of many altcoins is approaching the danger zone familiar from previous liquidations, which could trigger significant liquidations. Which altcoins stand out?
1. Ethereum (ETH)
Many rising factors support long positions in Ethereum (ETH) this week. The number of new ETH wallets has increased significantly recently. The waiting list for Ethereum staking is longer than the exit queue. Ethereum's on-chain transfers are at their highest in ten years.
As a result, traders have increased their capital and leverage in long positions. This has pushed potential liquidations of long positions clearly higher than those of short positions.
However, one concerning metric has emerged. The estimated leverage ratio for ETH is at an all-time high.
This ratio indicates the division of the exchange's Open Interest amount by coin reserves. The metric reflects the average level of leverage among traders. Growth indicates that more and more investors are taking risks with high leverage in derivatives trading.
Long-term investors may benefit from a short-term rise when positive factors come into play. However, rising leverage serves as a serious warning sign. A major liquidation event could occur for ETH at any time.
If ETH drops to the $2,800 range this week, potential liquidations of long positions could exceed $5.8 billion.
2. Bitcoin Cash (BCH)
Experienced investor Peter Brandt highlighted Bitcoin Cash in his latest market outlook. According to him, BCH is approaching a significant resistance level of $650. If the level breaks, a higher price range may form.
BeInCrypto's recent report also highlights several factors supporting the rise of BCH.
Derivative traders appear to share this bullish outlook. They are directing more leveraged capital to long positions than to shorts.
However, Coinglass data reveals a new concern. BCH's Open Interest has risen to $980 million, the highest level ever recorded.
History shows that when BCH's Open Interest has exceeded $600 million, the price has been accompanied by a sharp and prolonged correction.
Additionally, BCH is currently hovering around a strong resistance level of $650. This increases the likelihood of profit-taking at any moment.
If BCH drops to the $570 level this week, total liquidations of long positions could exceed $80 million.
3. Pepe (PEPE)
Early January capital flows indicate a shift towards meme coins. This has revived hopes for a new meme coin era.
Recently, estimates that PEPE's market cap could rise to $69 billion by 2026 have increased positive sentiment around the token.
The liquidation map for PEPE shows that liquidations of long positions could exceed $15 million if the price drops to $0.00000613. This would represent a decrease of about 10% from the current price.
This scenario is still possible. PEPE has risen over 70% since the beginning of the year. Those who bought in early are now in profit and may decide to realize their gains while market doubts persist.
Furthermore, experts have warned of a possible Elliott Wave correction. According to them, PEPE may have already completed its third wave of ascent.
The cryptocurrency markets are expected to remain volatile in the coming days as geopolitical tensions rise. Without learning from the mistakes that led to over $150 billion in liquidations in 2025, similar losses could occur in 2026.