Altcoin Rally Faces Headwinds Amid Bitcoin Consolidation
Bitcoin stabilizes after strong gains, but major altcoins show signs of fatigue.
Major altcoins have surged since Bitcoin’s July 15 low amid the leading cryptocurrency’s period of consolidation near $120,000. Ethereum (ETH), Solana (SOL), and XRP have seen gains of approximately 24%, 20%, and 12%, respectively. However, analysts are highlighting potential exhaustion signals and warning of a possible technical correction despite ongoing macro-level support factors like anticipated Federal Reserve rate cuts.
Mixed Signals for Top Tier Tokens
The significant bull run experienced by top altcoins may be entering a corrective phase. According to CryptoQuant, analyst Julio Moreno stated that “top altcoins such as Ethereum, Solana, and XRP may see a correction in the short-term.”
Ethereum’s chart shows signs of potential weakness. CoinGlass reported a spike in sell orders near the current price, suggesting potential selling pressure. Furthermore, an analysis by Elfa AI indicated a rise in “ask skew,” a possible indicator of a short-term reversal. Ryan McMillin of Merkle Tree Capital noted ETH is taking a “breather” after “running hard,” adding that approximately 500,000 ETH are “queued to unstake,” which could impact ETH’s ETF flows.
Solana also presents cautionary signs. While its open interest in derivatives has reached a record high, indicating active market participation often associated with high leverage, McMillin cited this as reinforcing expectations of “short-term leveraged long liquidation.”
Caution Amid Constructive Outlook
Despite the short-term technical signals suggesting a pullback, some analysts maintain a bullish view on the broader trajectory ahead of the correction. McMillin pointed to anticipated Fed rate cuts and Bitcoin’s correlation with global M2 money supply as factors supporting an ultimately “upward” move. He characterized the recent dip in altcoin performance as “noise,” a common refrain in crypto analysis during pullbacks from strong rallies.
The current consolidation allows capital to “rotate” into altcoins following gains in Bitcoin, a pattern often seen in crypto markets. This rotation fuelled the recent surge but also created conditions for profit-taking and short-term selling pressure.
