Bitcoin hit resistance near $120,000 and lost over 2% of its value in a matter of hours. This correction comes at a time when the market is showing extreme levels of speculation, especially in altcoins. Record volumes of open positions on derivatives increase the risk of swings and volatile declines across the entire crypto sector.
Overheating market
At the same time, the market is showing signs of overheating. Sentiment is significantly optimistic, and metrics across the cryptocurrency sector point to risky behavior. Particular attention is being paid to the record level of open interest in altcoins – the volume of open derivative contracts, which signals excessive speculation and high use of leveraged trading.
Over the past 24 hours, there have been liquidations worth over $500 million, further increasing pressure on the market. According to market data, liquidity on the sell side is rapidly approaching current prices, which could accelerate further declines.
The correction may target USD 113,000
Trader Michaël van de Poppe called the break above $120,000 a “false breakout” — in his view, it was just a liquidity withdrawal, and a return to the original range means that another test of the lower limit may follow. Similarly, traders expect a correction of 6-7% to $113,000, but remain positive in the long term, mentioning a possible rise to $138,000.
There is also concern among on-chain analysts. According to Glassnode, record open interest in altcoins, which exceeded $40 billion for the first time, points to strong market overheating. This increases the market’s vulnerability to sharp price shocks and volatile swings.
In summary, bitcoin is signaling a possible correction, with altcoins in a phase of significant speculative overheating. If the market does not adjust to the current level of risk, a more widespread decline across the cryptocurrency spectrum may follow.
