This week started with massive shockwaves spreading across the crypto space as staggering liquidations hit leveraged traders in both Bitcoin and altcoins. Data shared by Coinglass, as well as other market analytics sources, shows that this week more than $400 million worth of crypto positions were liquidated. That was followed by a mind-blowing liquidation, which amounted to a total of $1.5 billion worth of digital assets across various crypto exchanges.
$1.5 billion in crypto wiped out
It was altcoins that suffered the hardest blow this time, with Ethereum, Solana, and Dogecoin losing between 15% and 19% of their market value. Bitcoin has crashed back to the $110,000 level. Ethereum has nosedived below $4,000, and DOGE is trading at $0.2294. Those were just the top ten coins, while many with smaller market caps have suffered even bigger blows, facing steep corrections.
More than 400,000 traders had their long and short positions forcibly closed. A lot of them were focused on altcoin futures, where high leverage is common and liquidity is rare. This week, liquidations saw levels not seen for many months, emphasizing once again how fragile and speculative the cryptocurrency market can be at times. While the $1.5 billion of crypto positions have been just wiped out, many traders are now questioning whether the long-anticipated altcoin season is coming indeed or if it was nothing but a myth.
Waiting for altcoin season miracle to come
Every four years, investors excitedly speak about “altcoin season” coming after Bitcoin’s rally. By an “altcoin season,” they mean a period when Bitcoin begins to consolidate after locking in massive gains and liquidity starts flowing into Ethereum, Solana, Cardano, Dogecoin, Tron, and countless other altcoins. During these rallies, many altcoins have historically outperformed Bitcoin in terms of percentage, giving high chances to traders to make tremendous gains. As traders look forward to this “altcoin season” every crypto cycle, their anticipation fuels multiple speculations, creates memes, as many new projects claim they will succeed in becoming “the next Ethereum.”
Still, the huge liquidation wave that hit the market this week has shown once again how fragile any bullish expectations in the crypto market can be. Rather than seeing capital flow into alts, traders felt a wave of fear and panic. Over the past week, Bitcoin has crashed, losing roughly 6% and falling from $117,800 to below the $111,000 level. 2.7% of its value was lost within the past day alone, letting Bitcoin slide from $113,800 to where it is now, losing around $3,000.
Over the past seven days, the second-largest crypto, Ethereum, has collapsed by 15%, falling from $4,020 to $3,927 per coin. In short, the market has seen a cascade of forced sales, showing how fast and how radically the market sentiment can shift.
Bitcoin remains stronger than altcoins
As we have seen how easily the $1.5 billion got wiped out of the crypto market, one thing is clear: Bitcoin remains the safe haven of crypto, while the majority of altcoins seem to strongly depend on speculative flows and leverage. Large institutional investors now prefer to avoid small-cap altcoins as they have put their millions into Bitcoin and Ethereum ETFs. Therefore, those alts are particularly vulnerable when liquidity dries up – many altcoins have suffered double-digit price crashes, showing what brutal losses over-leveraged traders can face.
Unlike many altcoins, the flagship crypto, Bitcoin, has managed to hold above $110,000, just showing a regular correction so far.
Still, many traders remain positive that the alt season is coming anyway, while the majority of altcoins are fueled by nothing but hype. Only top coins, Ethereum and its rivals – Solana, Cardano, etc, provided actual utility – DeFi, smart contracts, NFTs, etc.
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Wall Street is changing the crypto market
The crypto market has undergone radical changes since its early days of ICOs. Back then, new tokens sprang up almost every month, and the enthusiasm around them could push their prices high. Those were the glory days of altcoin seasons.
However, now that Wall Street has stepped into the game, adding billions to market liquidity, they are largely those who are turning the market in one direction or another. Mostly, they prefer assets with stable and large liquidity, credibility, and regulatory compliance – Bitcoin, Ethereum, Solana, and a handful of other top altcoins, perhaps. The rest of the altcoin market remains vulnerable to brutal market crashes like the one we saw this week. A lot of the above-mentioned $1.5 billion liquidations came from overleveraged bets on altcoins.
Ethereum and Solana remain strong since they have strong networks and utility. The Cardano founder, Charles Hoskinson, has recently promised that Cardano is going to “break the Internet”.
It seems that traditional altcoin seasons will be hardly possible in the future and will likely happen randomly, if at all. The future belongs to crypto with growing utility; just hype and FOMO will not be enough anymore.
