The cryptocurrency market has witnessed a dramatic turn of events over the last 24 hours, with liquidations soaring close to $1 billion. This spike in liquidations has been primarily driven by a sharp correction in the altcoin sector, while Bitcoin has maintained its ground at approximately $119,410. This stability in Bitcoin comes amid a broader market where the total cryptocurrency capitalization has dipped, tarnishing a streak of four consecutive days of price increases.
Altcoins Lead Crypto Market Correction
The past week has taken a toll on the cryptocurrency landscape. The total market capitalization has decreased by about 5%, shrinking from nearly $4 trillion to $3.78 trillion. Among this downturn, the altcoin market cap suffered a staggering 10% decline, dropping from $1.57 trillion to $1.4 trillion. This correction seems to contradict the recent excitement generated by altcoin season, an event hinted at by industry figures like Binance founder Changpeng Zhao.
This sharp drop in altcoin prices has had significant implications for derivatives traders, particularly those who took short positions in anticipation of continued gains. The confusion and volatility in the altcoin realm have spurred extensive liquidations, with over 314,000 traders affected, as reported by Coinglass.
Crypto analysts, including renowned figure Michael van de Poppe, have opined that the volatility is expected to persist. He emphasizes that altcoins have yet to reach their previous all-time highs and predicts that a new bull market for these assets may just be beginning. Van de Poppe notes, “If you’re not going to be trading that volatility, you’ll be required to be patient.”
The current situation is somewhat of a breather after a period of skyrocketing investments catalyzed by U.S. President Donald Trump’s recent endorsement of landmark crypto bills. A report from 10x Research indicates that Asian trading hours significantly boosted crypto prices, with Bitcoin experiencing a substantial 16% gain overall—25% during Asian hours alone. Conversely, the European and U.S. markets faced selling pressure, with declines of 6% and 3%, respectively.
Bitcoin’s robust hold around the $118,000 mark also raises questions among analysts. Despite the impressive performance, indicators such as the Relative Strength Index (RSI) remain elevated above 75, suggesting an overbought condition. PlanB, the creator of the popular stock-to-flow model, has remarked that such conditions are quite typical during Bitcoin bull runs, hinting that there could be further movement upwards.
Ethereum has also displayed noteworthy trends, showing a growth of 63% in the past month, with Asian trading contributing an impressive 96% gain during the same timeframe. However, European and U.S. markets have seen profit-taking actions, leading to declines of 26% and 7%, respectively. The selling pressure contrasts sharply with the aggressive buying seen earlier in the month.
ETH Sees Profit Booking in Asian hours – Source: 10x Research
As the market cools off, many analysts believe that today’s pullback in the altcoin sector is a standard profit-taking phase rather than a definitive signal of a broader downturn. The prevailing sentiment is that the underlying bullish trend remains intact, despite the recent fluctuations. With stakeholders closely monitoring market movements, the future of cryptocurrency trading continues to hang in a delicate balance.