Why is crypto down today? BTC, ETH, XRP, in red

The crypto market cap is trending lower this Wednesday, as traders continue to lock in profits following a rally fueled by Bitcoin’s recent all-time high. With widespread sell-offs across all major cryptocurrencies, this raises a critical question: Is this just a healthy correction, or is the bull run losing steam?

Why is the crypto market falling today?

The crypto market is experiencing a sharp pullback, with top 10 cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), XRP (XRP), BNB (BNB), and Solana (SOL) all slipping in price.

Bitcoin continues to trade sideways, hovering around $118,000 at the time of writing, after losing the $120K support level last week. ETH, XRP, BNB, and SOL also fell sharply, recording daily losses of 3.3%, 10.8%, 4.3%, and 8.1%, respectively.

The total crypto market cap has dropped 6.9% during this period, standing at $3.9 trillion as of Thursday morning, Asian time, with over $786 million in liquidations, mostly from long positions.

Here are the key reasons driving the losses:

Investors are locking in their profits

The recent dip in crypto prices seems to be driven by profit-taking and possibly some early repositioning ahead of a potential altcoin season.

Bitcoin had hit a new all-time high of $122,838 on July 14, but saw heavy selling soon after, dropping to around $116K within a day. Spot Bitcoin ETF inflows helped it bounce back close to $120K over the next couple of days, but it’s now stuck between $117K and $118K, showing signs of consolidation and fading momentum.

Altcoins like ETH, XRP, and SOL have a strong correlation with Bitcoin, above 0.75 as data from IntoTheBlock shows, so when Bitcoin corrects, these altcoins typically see price drops as well.

As traders continue locking in profits, it adds more selling pressure to the market, pushing prices down even further.

Traders anticipate altcoin season

The Altcoin Season Index, which tracks whether it’s altcoin season or not, is currently at 41 out of 100. For it to officially be considered altcoin season, the index needs to be above 75, meaning 75% of the top 50 cryptos are outperforming Bitcoin.

Back in December 2024, the index was above 75, but since then, Bitcoin dominance has grown, and most institutional attention has shifted to BTC.

Lately, though, the index has started moving back in favor of altcoins, hitting as high as 59 last week. This could be an early sign that altcoin season is around the corner. That’s likely why some traders are locking in profits from top cryptos and eyeing promising altcoins to rotate into this summer.

Outflows from Spot Bitcoin ETFs 

Adding to the current market pressure, spot Bitcoin ETFs have now recorded outflows for the third straight day, yesterday, with $285 million withdrawn over the 3-day period. This marks a sharp contrast to earlier this month when they brought in a record $6.6 billion in inflows.

These outflows suggest that some institutional investors may be stepping back or taking profits amid rising volatility. Such a shift not only contributes to broader selling pressure but also weighs on retail sentiment, as ETF activity often serves as a barometer of institutional confidence in the market.

Part of this caution could also be tied to growing worries about global trade tensions. With the U.S. possibly slapping major tariffs on its trade partners by August 1, or potentially backing off or delaying again, it’s creating uncertainty that’s spilling over into the cryptocurrency space.

Is the bull run over?

Despite the dip, retail sentiment hasn’t flipped bearish. The Crypto Fear & Greed Index is still showing “greed,” the same reading as last week. That means most individual traders are still optimistic and not too rattled by the recent correction.

This could be a sign that the bull run isn’t over. If buying interest remains strong and institutional flows return, Bitcoin and altcoins could very well retest their recent highs in the near future. For now, though, the market appears to be taking a breather.

According to veteran trader Arthur Hayes, the crypto market may be poised to witness one of the biggest crypto rallies in history. Hayes predicted that Bitcoin could reach $250,000 and Ethereum could hit $10,000 by the end of 2025.

He argues that the current macro environment will drive excess capital into scarce and borderless assets, as in his view, crypto remains the most direct hedge against monetary instability and long-term debt pressures.