Altcoins Extend Losses as Liquidity Crisis Hits Crypto Markets

The February selloff in cryptocurrency markets intensified on Wednesday, with leading altcoins extending significant losses. According to CoinGecko data, major tokens including Solana (SOL), XRP, and BNB shed between 4% and 6% over a 24-hour period. Zcash (ZEC) was the largest loser among the top 30 altcoins, dropping 6.5%. It was followed by BNB, Sui (SUI), Hyperliquid, and XRP, with losses of 6.1%, 5.8%, 4.3%, and 4.2% respectively. This downtrend, which began after Bitcoin’s October peak, gained momentum in early February, triggering multiple liquidation events. Even as Bitcoin attempts to stabilize around the $60,000 psychological level, altcoins appear weak, reflecting fearful investor sentiment.

The bearish outlook is reflected in prediction markets. Users on Myriad, owned by Decrypt’s parent company Dastan, put the chance of an “alt season” occurring in the first quarter at under 10%—the lowest level since the market launched. This data point underscores the pervasive lack of retail enthusiasm for speculative altcoin plays, a key factor cited by analysts in the current downturn.

Analysts attribute the persistent downtrend to a critical shortage of market liquidity. Ryan Lee, chief analyst at Bitget, told Decrypt that the reason stems from “persistently low market liquidity [and] subdued retail enthusiasm.” He identified a capital rotation into traditional safe-haven assets like gold, driven by a macro risk-off environment, as a primary drain on crypto market flows.

This liquidity squeeze has been violently exacerbated by large-scale investor behavior. Lee highlighted that “heavy whale stop-loss triggers and subsequent cascading liquidations have amplified the sell-off, draining overall flows and increasing downward pressure across Bitcoin, Ethereum (ETH), XRP, Solana, and beyond.” These forced sales create a feedback loop of selling pressure.

Eva Sever, CMO at SwapSpace, concurred with this assessment while pointing to additional systemic headwinds. “Liquidity concerns are also a result of hawkish Fed signals and sustained Bitcoin exchange-traded fund outflows amid investors’ risk-averse outlook, which have impacted Bitcoin’s recent price action,” Sever told Decrypt. The combination of cautious signals from the Federal Reserve and net withdrawals from spot Bitcoin ETFs has created a powerful headwind, compounding the liquidity crisis initiated by the rotation into gold.

Both analysts agreed that the immediate future points toward broad-based consolidation and heightened volatility. They identified next week’s inflation reports and consumer confidence readings as a potential make-or-break moment for near-term market direction. In this phase, Sever expects Bitcoin to remain range-bound, “hovering between $65,000 and $75,000.” She warned that “altcoins are likely to be more volatile and suffer 5% to 15% drawdowns in this phase.”

Looking beyond the current turbulence, the analysts project a potential rebound, though its timing is distant. Ryan Lee expects a recovery in the second half of 2026, contingent on strong fundamentals and “fueled by the reemergence of institutional capital and interest.” Eva Sever cited two specific catalysts that could move the markets: a resumption of Bitcoin ETF inflows and a shift to easing monetary policy by the Federal Reserve. Without these triggers, the current state of volatile, liquidity-starved consolidation is likely to persist, leaving altcoins particularly vulnerable to extended losses.