Fading risk appetite is weighing on major altcoins, even as Bitcoin holds steady in a narrow trading range for a second week.
XRP, Solana, and Dogecoin were down 5%, 5.9% and 7%, respectively, on the day according to CoinGecko.
The correction coincides with Bitcoin’s brief dip on Thursday, a move that prompted a wave of liquidations across the market.
Speaking with Decrypt, Shawn Young, Chief Analyst of MEXC Research, attributed the recent market retracement to “cautious sentiment amid thin summer liquidity” among investors.
The view is echoed by Bitfinex analysts, who said the market was approaching a “critical juncture” due to excess leverage in altcoins, making it vulnerable to a liquidation cascade.
Data from CoinGlass shows leveraged long positions have been consistently wiped out, with liquidations surpassing at least $250 million every day for the past five days in a row.
The ratio of long to short liquidation for the period hovers around 3. In other words, for every trader betting on a price drop who gets forced out of their position, at least three traders betting on a price increase have exited.
MEXC’s Young also pointed to the U.S. dollar’s recent strength and rising real yields as key pressures impacting not only Bitcoin but the broader crypto market.
The push and pull between macroeconomic pressures aligns with Singapore-based trading firm QCP, which highlighted Wednesday that crypto’s muted response to positive headlines is a classic signal of “late-cycle behavior.”
The market may have to contend with these pressures for some time before finding fresh momentum, Decrypt was told.