Altcoins take a hit as crypto market sees $1.5 billion liquidated

Ethereum, Solana, and other altcoins faced significant declines as crypto markets experienced a sharp correction on Monday, resulting in over $1.5 billion in futures liquidations. This downturn followed Bitcoin’s rise past the $100,000 mark, prompting speculation that investor optimism for an “alt season” might be waning.

Crypto market experiences over $1.5 billion in liquidations

The pullback impacted major coins significantly, with Ethereum (ETH), Solana (SOL), XRP, and Dogecoin (DOGE) each suffering losses exceeding 4%. The previous week had seen the altcoin market cap close above $1.6 trillion for the first time since 2021, which fueled expectations for an alt season. However, these hopes dampened as Bitcoin’s dominance remained evident, despite its own modest decline of 3.2%.

A staggering $1.4 billion in altcoin long positions were liquidated, showing that bullish expectations among investors had collapsed. This surge in liquidations, the highest of its kind in two years, has raised concerns. Many investors are now shifting their assets to stablecoins or Bitcoin as a precautionary measure.

Data from CryptoQuant indicates the previous rally in altcoins did not significantly detract from Bitcoin’s performance and was supported by increased stablecoin liquidity in the market. Analysts suggest that this correction could be a necessary step before the altcoin market resumes its upward trajectory, drawing on past experiences where similar declines preceded new highs.

Investors are turning to altcoins like Solana and TON, both of which are currently trading just below their all-time highs. Analysts from CryptoQuant recognize these projects as having solid fundamentals and ongoing development efforts, hinting at the potential for growth in the near future.

The recent market dip correlates with a more widespread relationship between Bitcoin and altcoins, especially after Bitcoin’s recent drop below $100,000. The strength of this correlation suggests that Bitcoin’s movements will heavily influence the altcoin market’s direction moving forward.

Crypto market faces massive liquidation event

In the broader context, the crypto market experienced a crash that wiped out approximately $1.7 billion in leveraged positions within 24 hours. Bitcoin fell sharply from above $100,000 to around $94,100, while Ethereum declined by 8% to below $3,800. Overall, the market capitalization shrank by 7.5%.

The market corrections were driven by a combination of factors, but crucially, no single event has been pinned down as the sole cause. Observers noted potential influences like a significant Bitcoin transfer from the Royal Government of Bhutan and Google’s recent quantum computing advancement when analyzing the situation.

Bhutan’s transfer of 406 Bitcoin to QCP Capital has raised eyebrows. This government-controlled wallet also executed multiple smaller transactions, followed by an additional transfer of $19 million to an unknown address, suggesting active management of their crypto assets. Bhutan continues to hold considerable Bitcoin reserves, reportedly mining through renewable hydroelectric power, and while they have sold assets previously, the implications of their activities are still being assessed.

Concurrent to these developments, Google made headlines with its release of a new quantum computing chip named ‘Willow.’ This chip demonstrated unprecedented capabilities, with its ability to perform tasks in minutes that would take state-of-the-art supercomputers millennia. As quantum technology progresses, concerns over its potential to compromise crypto security have surfaced. However, experts maintain that current quantum systems are far from threatening Bitcoin’s encryption, with estimates suggesting that a much larger quantum computer would be necessary to pose any serious risk.

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