Altcoins Face $1 Billion Liquidations as Bitcoin Dominance Surges

Altcoins have experienced significant liquidations, totaling nearly $1 billion, since the launch of the Bitcoin ETF. This has led to a growing divide between Bitcoin and altcoins, as Bitcoin continues to consolidate demand near new highs while altcoins remain trapped in a speculative long squeeze.

Bitcoin dominance has increased, absorbing liquidity and leaving altcoins with less capital. Even major altcoins like Ethereum, Solana, and Ripple have struggled to keep up with Bitcoin's new all-time high, failing to surpass key resistance levels.

Historically, during the 2021 cycle, Bitcoin's peak around $69,000 was followed by altcoins reaching their own highs. Ethereum hit $4,891, Solana peaked near $236, Binance Coin reached $671, and even Dogecoin made it to $0.73. This synchronized upswing is what is known as the "altseason." However, this synchronized rotation is missing in the current market.

CryptoQuant’s on-chain metrics reveal a clear divergence since the launch of the Bitcoin ETF. Bitcoin's Cumulative Liquidation Delta (CLD) on Binance shows that shorts were crushed by roughly $190 million, indicating that bears were getting squeezed as BTC climbed higher. In contrast, altcoins experienced nearly $1 billion in long liquidations, suggesting that traders were betting on an "altseason" that never materialized.

Since December 2024, this gap has only grown wider. While Bitcoin continues to break new ground and steamroll shorts, leveraged altcoin bulls are getting liquidated as capital remains locked into Bitcoin. This has left altcoins stuck in a long squeeze loop, with some posting double-digit drawdowns.

Typically, when Bitcoin approaches local tops or breaks key resistance, capital starts to trickle into altcoins as traders try to front-run the "altseason." However, this time, that rotation did not occur. Instead, there was no follow-through or structural breakout, leading to speculative inflows and overexposed longs. Since April 2024, altcoins’ Cumulative Liquidation Delta (CLD) has been consistently skewed toward long liquidations, indicating that any capital flowing into high-caps like Ethereum, Solana, or Ripple is more speculative.

As Bitcoin approaches new highs, structural demand consolidates around it, leaving altcoins out in the cold. This liquidity loop results in liquidation cascades, failed breakouts, and resistance levels that act like brick walls. Therefore, betting on a full-blown 2021-style "altseason" when Bitcoin pushes into price discovery might be premature. Unless these mega-caps attract organic bid support, achieving a fresh all-time high remains a challenging task.