A wave of futures liquidations has rattled more than 565,000 traders, indicating that the recent surge in Bitcoin to all-time highs has not been enough to prevent a decline in the altcoin market.
Major cryptocurrencies, including Ethereum (ETH), Solana (SOL), and XRP, experienced losses exceeding 10%, just one week after the altcoin market had surpassed a market capitalization of $1.6 trillion for the first time since 2021.
This correction shows the continued dominance of Bitcoin despite predictions of a potential altcoin season.
According to data from Coinglass, cryptocurrency liquidations have surged by 70% in the past 24 hours as positions worth $1.7 billion liquidated.
However, several crypto analysts believe that the pullback is temporary and represents a healthy correction that could drive the altcoin market cap to new high like it was experience in 2021.
CryptoQuant CEO Ki Young Ju suggested that the dip may be linked to reduced expectations for an altcoin season after Bitcoin surpassed the $100,000 mark.
He added that the earlier rally in altcoins was not at the expense of Bitcoin as new money entered the market rather than capital rotating out of BTC.
It is important to note that liquidations occur when an exchange forcefully terminates a trader’s leveraged position because the trader cannot meet the margin requirements.
Large-scale liquidations are often a result of panic buying or selling.
A series of liquidations could signal a turning point as market sentiment may drive a price reversal toward a bullish trend.