Why XRP, SOL, and XAUT Trigger Major Liquidations This Week?

Escalating geopolitical tensions over the weekend did not trigger severe capital outflows from altcoins. This test suggests that altcoin prices are hovering around equilibrium levels and are preparing for a significant move. As a result, the market also carries the potential for large-scale liquidations.

Altcoins such as SOL, XRP, and XAUT each have distinct drivers that could soon spark volatility and liquidations on both Long and Short positions.

1. Solana (SOL)

SOL has traded sideways around $84 since early February. Maintaining a narrow range around a fixed price reflects a “volatility compression” phase that often precedes an explosive breakout.

For this reason, SOL derivatives traders may soon face liquidation regardless of whether they hold Long or Short positions. Analyst Joao Wedson’s observation of the Solana Buy/Sell Pressure Delta index reinforces this possibility.

The Solana Buy/Sell Pressure Delta indicator has turned red and declined sharply. He explained that historically, this signal does not necessarily indicate further downside. However, it may mark a major bottom before a reversal.

The 7-day liquidation map from Coinglass shows that if SOL falls to $74 this week, cumulative potential liquidation volume for Long positions could reach $376 million.

Conversely, if SOL rebounds to $95, cumulative potential liquidation volume for Short positions could reach $450 million.

2. XRP

XRP is also facing a short-term balance between buying and selling pressure. Negative news about escalating tensions involving the United States, Israel, and Iran over the weekend did not trigger a sell-off. Instead, XRP held steady around $1.35.

A recent report by BeInCrypto stated that the Net Unrealized Profit and Loss (NUPL) indicator shows the final phase of a downtrend. Over the past 12 years, March has delivered an average return of 18% for XRP, making it the strongest month of the first quarter.

However, over the past week, 472 million XRP, worth $652 million, moved to Binance. Binance balances have shown signs of reversing into growth after months of decline.

These opposing forces increase the likelihood that XRP traders may face liquidation regardless of whether they hold Long or Short positions.

The 7-day liquidation map shows that if XRP drops to $1.20 this week, cumulative potential liquidation volume for Long positions could exceed $125 million. Conversely, if the price rises to $1.50, cumulative potential liquidation volume for Short positions could surpass $157 million.

3. Tether Gold (XAUT)

Tokenized gold has attracted trader attention as physical gold prices continue to climb.

Tether Gold (XAUT) is a digital token backed by physical gold and issued by Tether. Data from Coinglass shows that XAUT’s total Open Interest recently surpassed $800 million.

XAUT’s price primarily depends on the price of physical gold. However, as more investors gain exposure to XAUT and increase leverage levels, liquidation risks for both Long and Short positions may rise.

The liquidation map shows that on Bybit alone, if XAUT climbs above $5,600 and sets a new high, Short traders could face liquidation losses exceeding $61 million. Conversely, if the price falls to $5,000, Long traders could face liquidation losses exceeding $90 million.

If Binance data is included, liquidation losses could become even larger. A report from CryptoQuant stated that XAUT has officially entered the Top 10 of Binance’s perpetual contract trading pairs.

Overall, total market Open Interest has declined from over $120 billion at the beginning of the year to $94 billion currently. Short-term derivatives traders have reduced leverage.

They have focused primarily on large-cap altcoins and tokenized real-world assets such as gold and silver. Market participants appear more cautious and are waiting for clearer signals before determining the next trend.