Altcoin Market Cap Faces Sharp 10% Correction in Final Week of July

The cryptocurrency market experienced its first red weekly candle after four consecutive weeks of gains. The altcoin market cap suffered a steeper decline than Bitcoin, triggering massive liquidations across derivatives markets.

Nearly $1 Billion Liquidated as Market Cap Falls

The overall crypto market cap dropped 5% this week, falling from nearly $4 trillion to $3.78 trillion according to TradingView data. However, the altcoin market cap experienced a more severe correction, plunging almost 10% from $1.57 trillion to $1.4 trillion.

This sharp correction in altcoins compared to Bitcoin caused significant losses for short-term derivatives traders. Coinglass reported nearly $1 billion in liquidations over the past 24 hours, with 314,302 traders being liquidated.

Of the nearly $1 billion liquidated, over $840 million came from long positions, accounting for approximately 84% of total liquidations. This highlights the failure of many leveraged traders who expected prices to continue rising throughout the week.

Data from CryptoBubbles showed that nearly all altcoins dropped sharply, with losses ranging from 6% to over 20%. This move represents the first significant wave of profit-taking after four consecutive weeks of rising market capitalization.

Asian Trading Hours Drive Profit-Taking Pattern

According to a new report from 10x Research, Asian trading hours were the primary driver of the recent rally before the correction. While Bitcoin posted a 16% gain overall, Asian hours alone contributed 25% to that rise, meaning both Europe and the US actually saw net selling due to profit-taking.

A similar pattern emerged with Ethereum, which surged 63% in the past month. Nearly all of that gain occurred during Asian trading hours, while Europe and the US showed negative performance as investors took profits.

The report explains that although some market movement may be due to treasury-related news emerging after US market hours, the more likely explanation is heightened enthusiasm and aggressive buying from Asian traders.

US and European investors appear to be locking in profits, ironically from the same positive news that fueled the strategic crypto accumulation narrative. Asian traders were buying based on FOMO from news originating in the other half of the world, only to face losses when those same headlines triggered selling pressure.

Market Sentiment Remains in Greed Territory

Despite the sharp correction and nearly $1 billion in liquidations, many analysts view this pullback as a natural profit-taking phase rather than the beginning of a long-term downtrend. The broader upward trend is believed to remain intact.

Market sentiment continues to register in greed territory according to the Fear and Greed Index. Despite the significant liquidations, there are no signs of panic selling in the cryptocurrency market.

Several prominent figures in the crypto space have expressed confidence that this correction is temporary. Industry experts suggest that altcoins will likely bounce back stronger than their previous leg up, emphasizing the importance of patience during market corrections.

Altcoin Market Cap Outlook

The current correction in altcoin market cap appears to be a healthy pullback following weeks of substantial gains. The fact that Bitcoin held relatively strong during the selloff is viewed as a positive sign for the overall market structure.

The 10% decline in altcoin market cap from $1.57 trillion to $1.4 trillion represents a significant but not unprecedented correction in the volatile cryptocurrency market. Historical patterns suggest that such corrections often provide buying opportunities for long-term investors.

As Asian markets showed the strongest buying interest during the recent rally, continued support from this region could be crucial for the next phase of altcoin market recovery. The geographic distribution of buying and selling pressure will likely continue to influence short-term price movements.

Key Takeaways for Altcoin Investors

The sharp correction in altcoin market cap serves as a reminder of the volatile nature of cryptocurrency markets. Leveraged positions faced significant liquidations, highlighting the risks associated with derivatives trading during periods of high volatility.

The profit-taking pattern observed across different geographic regions provides insights into global trading dynamics. While Asian traders drove much of the recent rally, Western investors took advantage of higher prices to realize gains.

Despite the correction, the underlying fundamentals supporting the altcoin market remain intact. The absence of panic selling and continued greed sentiment suggest that this may be a temporary setback rather than a trend reversal.

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