Altcoin Selloff: Bitcoin Dip Triggers $1.1B Liquidations

The cryptocurrency market experienced a dramatic shift as Bitcoin’s decline below the $110,000 level sparked a cascade of liquidations totaling $1.1 billion within 24 hours. According to data referenced by CryptoPotato, the pain was disproportionately felt in the altcoin sector, with 75% of the losses originating from non-Bitcoin digital assets. Ethereum bore the heaviest burden, with its break below the $4,000 support level contributing to nearly 45% of the total liquidations alone.

This selloff coincided with a significant market phase rotation. Analysis from Altcoin Vector indicates that after 79 days of Ethereum dominance and swings through mid- and small-cap tokens, leadership has rotated back to Bitcoin. This shift ended a 68-day Ethereum season that had propelled ETH from $2,200 to an all-time high of $4,900. The rapid change in momentum highlights the crypto market’s inherent volatility and Bitcoin’s enduring role as the primary market driver.

Despite the short-term turbulence, several analysts are identifying constructive technical formations beneath the surface volatility. Crypto analyst Moustache observed that while traders are distracted by Bitcoin-led rotations, most altcoins have been quietly forming a Cup & Handle pattern over the past four years. This classic bullish setup in technical analysis typically indicates a prolonged consolidation period preceding a significant upward move.

The formation of this long-term pattern suggests that the current downturn may represent a healthy correction within a larger bullish trend rather than a structural breakdown. The extended nature of the consolidation—spanning four years—implies that when the breakout occurs, it could be substantial. This technical perspective provides a counter-narrative to the immediate bearish sentiment, pointing to potential strength being built during periods of apparent weakness.

Adding to the constructive outlook, Swissblock’s latest analysis reveals that the crypto market is currently in a reset phase that historically signals potential opportunity. Their Aggregated Impulse indicator, which tracks exponential price structures across the top 350 assets, has accurately flagged major market bottoms in the past. Currently, only 22% of altcoins are showing negative impulse, placing the market near the historical bottom zone of 15-25%.

The historical performance following similar signals is compelling. Since 2024, the last seven times this indicator triggered, Bitcoin subsequently rallied 20-30%, while altcoins surged between 50-150%. Swissblock noted that once this reset completes, Ethereum and other altcoins typically lead the next rotation. This data suggests that patient investors who withstand the current volatility could be positioned for substantial gains as market momentum eventually shifts back toward risk-on assets.

The critical factor for an altcoin recovery appears to be Bitcoin’s stabilization. According to the analysis, Bitcoin remains the key driver of market sentiment, and once it forms a bottom and establishes support, altcoins could regain their upward momentum. The steady Risk-Off Signal noted in the market analysis suggests there is no underlying structural fragility, indicating that early signs of a possible bottoming process may already be taking shape.

This current correction, while painful for leveraged traders, may ultimately serve to reset overextended positions and create a healthier foundation for the next leg up. The combination of technical patterns, historical indicators, and market phase analysis points toward the selloff being a temporary pause in altcoin season rather than its conclusion. For investors with a longer-term perspective, the current market conditions may represent a strategic entry point before the next rotation toward altcoin leadership.