Altcoins started the week with $1.5 billion worth of futures liquidations as major tokens such as ETH, SOL, XRP, and DOGE experienced a correction.
The altcoin market cap closed last week above $1.6 trillion following a surge in enthusiasm for an altcoin season.
Investors' expectations for an altcoin season may have calmed down after Bitcoin broke the $100,000 level.
Ethereum (ETH), Solana (SOL), XRP, and the general altcoin market experienced a pullback on Monday, recording over 1.5 billion dollars in futures liquidations. The correction shows that Bitcoin's dominance continues to outpace altcoins despite speculation about an altcoin season.
Altcoins drop amid rising expectations for the altcoin season
Major altcoins, including ETH, SOL, XRP, BNB, and DOGE, recorded losses exceeding 4% on Monday after signs of exhaustion among the bulls. The pullback comes after the altcoin market closed the week above 1.6 trillion dollars for the first time since 2021.
Several members of the crypto community suggested that the decline may be due to reduced expectations for an altcoin season after Bitcoin surpassed the $100,000 level.
While BTC only saw a 3.2% drop and around 185 million dollars in liquidations on Monday, altcoins took a hit, experiencing over 1.5 billion dollars in futures liquidations, according to data from Coinglass. Notably, most bulls who expected altcoins to continue their rise were wiped out of the market, with long altcoin positions liquidated reaching a two-year high of 1.4 billion dollars.
Such a high amount of liquidations could provoke significant FUD among investors and cause them to park their assets in stablecoins or BTC.
However, data from CryptoQuant CEO Ki Young Ju suggested that the previous recovery of altcoins was not at the expense of BTC, considering the growth of stablecoin liquidity in the market. This suggests that new money flowed into the market to drive the recovery rather than a capital rotation from BTC.
This has fueled high expectations among cryptocurrency enthusiasts, who suggest that the correction is a temporary pullback to boost the market capitalization of altcoins to new highs.
A look at previous altcoin seasons also indicates that this pullback may be healthy for altcoins. In the 2021 market cycle, altcoins saw a significant drop a few weeks after reaching new highs in May 2021 before recovering and setting new highs in November.
As a result, traders may be positioning themselves to treat the decline as a buying opportunity. This is evident in tokens like SOL and TON, which are trading slightly below their previous all-time highs.
CryptoQuant data suggests that these two assets are favorites to surpass previous ATH prices following the performance of BNB and Bitcoin over the past week.
"Both projects are backed by solid fundamentals, including active development teams and active networks. Given these figures, it seems likely that these coins may follow Bitcoin's lead in the near future," said CryptoQuant analyst Maartun.
Additionally, the recent market drop stems from the constant correlation of altcoins with Bitcoin after it fell below $100,000 over the weekend. If this correlation remains at elevated levels, the likelihood of a full altcoin season remains low.
