- Altcoins with high leverage ratios, such as TRUMP and BONK, pose higher liquidation risks due to aggressive volatility.
- Tokens like TRUMP and SUI show excessive centralized trading, with 24h volumes surpassing market caps, signaling potential price manipulation.
- XMR, MICHI, and FET exhibit high deleveraging activity, highlighting the impact of liquidations on market stability and trader positioning.
Altcoins traders are at higher risk when dealing with low-cap tokens, as fresh data shows increased liquidation exposure. The metrics also indicate levels of leverage and trading activity, reflecting potential threat to over-leveraged players in the market.
Altcoin Risk Levels and Liquidity Red Flags
Joao Wedson, a well-known crypto analyst, recently highlighted several risk indicators across lesser-known cryptocurrencies. In a tweet, he pointed to the Volume 24h/Market Cap metric as a key measure of centralized trading behavior. Tokens such as TRUMP and SUI recorded 24-hour trading volumes that exceeded their entire market caps. This suggests tight concentration of holdings and control, primarily within exchanges.
This pattern signals limited decentralization and increased trading churn, both of which amplify exposure to sudden price movements. Tokens that show extreme values in this metric are often viewed with caution by experienced traders seeking stability.
Elevated Open Interest Indicates Aggressive Leverage
Wedson also drew attention to the Open Interest/Market Cap ratio as a measure of leverage intensity. TRUMP, ENA, and BONK ranked highest on this scale. A high ratio means a substantial amount of capital is tied up in derivative contracts relative to the token’s total valuation.
This situation tends to create unstable trading environments. When the leverage used in these contracts exceeds what the asset’s market can support, rapid liquidations follow. Such conditions make these altcoins more susceptible to price swings and unplanned losses.
Wedson noted that he generally avoids these types of assets, preferring tokens with healthier ratios and more reliable trading activity.
Liquidation Volumes Reveal Deleveraging Across Select Tokens
Another metric—Liquidation 24h/Open Interest—showed unusual patterns in XMR, MICHI, SUI, and FET. These tokens experienced high levels of liquidated positions in just one day, suggesting active deleveraging in response to market stress.
This signals that traders are being forced out of positions due to high volatility or poor margin management. When liquidation rates rise rapidly, it typically reflects excess risk within that specific token’s derivatives market.
The data outlined by Wedson serve as a caution to traders. Monitoring these metrics can help manage altcoin risk levels more effectively in today’s fast-paced crypto environment.
