The second week of September marked a significant milestone for the cryptocurrency market, as the Altcoin Season Index surged to its highest level in five years, fueled by positive sentiment across various altcoins. This uptick led several altcoins to reach all-time highs and attracted substantial open interest, signaling increasing trader engagement. However, the market’s bullish momentum also raised concerns about potential large-scale liquidations.
As the third week of September approached, a few altcoins exhibited signs of extreme FOMO (Fear of Missing Out), indicating heightened volatility and liquidation risks.
Ethereum (ETH) saw its reserves peak at approximately 4.9 million ETH, valued at around $22.2 billion. This figure does not include an additional 6.7 million ETH held in Ethereum ETFs, valued at $46.3 billion. According to a recent report by BeInCrypto, on-chain data suggests that ETH’s price could potentially reach $5,000 or higher, prompting derivatives traders to increase leverage and long positions. However, this strategy carries significant risk; a drop in ETH’s price to $4,046 could result in more than $8.8 billion in liquidations of long positions. Conversely, a rise to $5,000 would trigger about $4.8 billion in short position liquidations.
Notably, Ethereum’s profitable supply recently reached 99.68%, hinting at possible profit-taking strategies among investors. Furthermore, over 2.6 million ETH are currently queued for unstaking; this trend was initially sparked by Kiln Finance’s decision to unstake amid risks associated with SwissBorg. The continual growth of the unstaking queue as ETH’s price increased suggests a growing demand for profit realization.
Binance Coin (BNB) also saw a remarkable rally, hitting an all-time high of $944 in September. This surge was bolstered by the announcement of a new partnership between Binance and Franklin Templeton, aimed at fostering blockchain and crypto solutions for institutional adoption. However, the 7-day liquidation map indicates an imbalance favoring long positions among traders, suggesting many are betting on further price increases. A fall to $818 could lead to over $189 million in long position liquidations, whereas a rise to $1,031 would result in the liquidation of approximately $103 million in shorts.
Traders holding BNB longs should be cautious of market dynamics; recent data highlighted that total open interest (OI) for BNB reached $1.72 billion by September 14. Previous spikes in OI have historically precipitated corrections ranging from 7% to 15%.
MYX Finance (MYX) has exhibited one of the most contentious rallies this month, with the token skyrocketing by 450% over the past month. Nevertheless, skepticism surrounds MYX due to allegations of Sybil attacks during its airdrops and concerns about a potential collapse akin to Mantra (OM). The token has since retraced from its all-time high of $18.90 to approximately $10.90, representing a decline of over 40%. This pullback indicates that the initial FOMO-induced excitement is waning.
Despite this decline, derivatives traders are now leaning toward short positions, with the 7-day liquidation map showing that shorts could incur significant losses if the price rebounds. A recovery to $12.35 could liquidate over $19 million in shorts, while a dip to $8.79 could liquidate more than $12 million in longs. Some analysts remain optimistic about MYX’s potential, citing strong support in the $10–$11 range and predicting a possible bounce back.
In summary, as the altcoin market experiences significant fluctuations and speculative trading accelerates, traders must navigate the inherent risks of liquidations amid bullish sentiments. The potential for volatility remains high, especially for ETH, BNB, and MYX, all of which are critical barometers of market sentiment in the coming weeks.
