The crypto market is showing signs of hesitation after weeks of broad altcoin gains, with Ethereum, Solana, and XRP losing upward momentum as Bitcoin consolidates near the $120,000 mark. As traders debate whether the recent stall is the beginning of a broader correction or a temporary pause in a larger bull trend, analysts are warning of overextended conditions and growing sell-side risks in several leading altcoins.
After a powerful multi-week rally that lifted Ethereum by 24%, Solana by 20%, and XRP by 12% from their July 15 lows, momentum has begun to wane. Market watchers are now closely tracking key technical and on-chain signals suggesting short-term fatigue, rising leverage, and increasing liquidation risk - factors that could tip the market into a brief correction despite a fundamentally supportive macro backdrop.
Bitcoin’s strong rally to a new yearly high around $120,000 has been followed by a relatively tight trading range between $117,000 and $120,000, a classic consolidation phase that historically allows capital rotation into altcoins. This familiar dynamic did play out in mid-July, with leading non-BTC tokens seeing outsized gains as traders sought beta exposure.
However, the altcoin surge may be losing steam. Julio Moreno, head of research at CryptoQuant, told Decrypt that while Bitcoin’s sideways action created favorable conditions for altcoins, recent performance patterns in Ethereum, Solana, and XRP suggest a possible reversal in the short term.
“The market has priced in a lot of optimism, and significant rallies in recent weeks may now lead to a technical cooldown,” Moreno said.
Ethereum Faces Sell-Side Pressure and ETF Sensitivity
Ethereum, often seen as the bellwether for altcoin sentiment, is flashing multiple warning signals. According to CoinGlass, Ethereum’s order book is now showing a spike in sell orders within 10% of its current price, pointing to increasing supply pressure. The platform also recorded a negative delta, meaning market makers are hedging against downside risks.
Tristan Teo, founder of Elfa AI, which analyzes social and on-chain behavior, flagged a notable ask-skew in Ethereum’s market depth. This asymmetry suggests sellers are dominating order flow near resistance zones - a possible precursor to a local top.
“ETH has been leading the recent rally, but current order book dynamics hint at a possible reversal,” Teo said.
Meanwhile, Ryan McMillin, CIO at Merkle Tree Capital, cautioned that 500,000 ETH are currently queued for unstaking, a dynamic that could potentially pressure spot prices and disrupt recent ETF inflow patterns. Ethereum ETFs have been a key driver of the rally, with billions flowing into spot products since the SEC approved ETH-based exchange-traded funds in May.
“While the macro backdrop is still bullish, short-term profit-taking or large-scale redemptions could impact ETH's near-term direction,” McMillin noted.
Solana’s Open Interest Hits Record as Leverage Builds
Solana is also flashing signs of caution. While its spot price is still 30% below its November 2021 all-time high, its open interest (OI) - the total number of unsettled derivatives contracts - has reached a record level.
High OI in the absence of new price highs often signals excessive leverage in the system. This can amplify both upside and downside volatility, but in current market conditions, analysts warn that it’s more likely to lead to leveraged long liquidations if price fails to break higher.
McMillin flagged this as a key concern:
“This level of leverage on a still-lagging price base typically results in forced liquidations, especially if Bitcoin stays flat or dips slightly.”
According to Coinalyze, Solana's futures funding rate also turned sharply positive, suggesting that bullish sentiment has become crowded - a classic contrarian indicator when combined with price stagnation.
XRP: Strong Run, But No Breakout
XRP also joined the altcoin rally, gaining over 12% in the past week. However, the asset has struggled to decisively break key resistance at $0.89, and now faces weakening momentum indicators. RSI readings across major timeframes are retreating from overbought zones, while social sentiment has plateaued following Ripple’s recent legal wins.
“XRP’s rally is showing signs of exhaustion. If volume doesn’t pick up again soon, the token could retrace to support at $0.80,” said analyst Lark Rizzo at Ascent Strategy.
Unlike Ethereum and Solana, XRP’s rally has been driven more by legal clarity and ecosystem announcements, making it vulnerable to fading momentum in the absence of new catalysts.
Broader Market Still Supported by Macro Trends
Despite these emerging technical and behavioral warning signs, not all analysts are calling for a full-blown correction. Many continue to highlight the strong macroeconomic backdrop as a bullish tailwind for digital assets heading into Q3 and Q4.
With the Federal Reserve expected to pause or even reverse its tightening cycle, and global liquidity trends pointing upward, many traders view any near-term pullbacks as opportunities for reaccumulation rather than signs of a trend reversal.
“Rate cuts are on the horizon, and Bitcoin remains correlated with global M2 growth. The next major move is still likely to be up,” said McMillin, downplaying the recent dip as “just noise.”
Bitcoin’s continued strength near $120,000 without major rejection or long liquidations has also lent confidence to bulls, reinforcing the belief that this is a consolidation phase, not the start of a market-wide reversal.
What to Watch in the Days Ahead
Traders and analysts will be closely watching the following developments:
- Ethereum’s ETF inflow data: Sustained net inflows may help offset selling pressure from unstaking activity.
- Solana’s leverage metrics: Rising open interest without price breakout increases the risk of liquidations.
- Bitcoin’s consolidation range: A clean break above $122,000 could reignite bullish momentum across altcoins.
- Macro policy updates: Fed commentary and economic data releases may shift risk sentiment in either direction.
Should altcoins maintain current support levels despite order book resistance, it may signal consolidation and digestion of gains rather than an imminent retracement. However, a break below near-term support in ETH or SOL could trigger larger risk-off flows in the short term.
Final Thoughts: Temporary Chill or the Start of a Shakeout?
While the recent pause in the crypto rally has sparked concern among traders, the broader structure of the market remains constructively bullish. Price exhaustion and profit-taking are natural in any uptrend, especially after double-digit weekly gains.
Still, signs of over-leverage, sell-side asymmetry, and weakening follow-through mean that short-term caution is warranted, particularly for those operating on high timeframes or using leverage.
In this environment, patient accumulation and risk-managed entries may prove wiser than chasing tops - at least until Bitcoin resumes its next leg upward.