There is a wide pullback in the cryptocurrency market after a few weeks of strong bullish rally. The recent pullback is majorly contributed by a drop in the price of front-runner assets like Bitcoin (BTC) and Ethereum (ETH). On the day, Bitcoin is trading around $102,000. Ethereum, on the other hand, has also dropped to the $2,500 level. 

This cooldown in the crypto market is happening in the wake of changing investor behavior, reduced trading activity and heightened long-term holding. Market indicators now point to a potential consolidation as traders re-evaluate risk and position themselves for what lies ahead. 

Crypto Market Cap Falls, as Investors Shift Positions

The total crypto market cap (TOTAL) surged to $3.3 trillion following the impressive rally by cryptocurrencies over the last week. However, the TOTAL is now dropping amid sluggishness in the price of BTC. Additionally,  several altcoins also have dropped to follow the bearish Bitcoin. As per data by TradingView, the total sits at $3.24 trillion as at press time. The crypto market has lost $87.46 billion over the last 24 hours. 

If the current position fails to hold, the total crypto market cap could fall further. The $3.14 trillion level serves as an immediate support level. Should the current support level fail, bears could push the TOTAL down further to the $2.92 region.

However, a Bitcoin and altcoin rebound could make the TOTAL recover. A key resistance level exists at $3.3 trillion. Clearing above this level is crucial to push the momentum of the crypto market towards $4. The next resistance lies at $3.5 trillion. 

Bitcoin’s Price Drop Follows Holding by Long-term Investors

Bitcoin is down from its recent highs of $105,500. The daily chart for the BTC/USDT pair shows that BTC is trading at $102,194 as at press time. Nevertheless, on-chain data still shows strong buying and accumulation of Bitcoin.

However, trading activity around has dropped with 14 million BTC held in illiquid wallets. Recent reports also show that over the last 30 days, 180,000 BTC were injected into low-activity wallets. This indicates that the large holders are not selling out during the current pullback. Instead, they are still piling up since BTC climbed past the $100,000 psychological boundary. 

Ethereum Slides as Traders React to Market Conditions

On the other hand, Ethereum has also retreated to $2,500, as a result of a pull-back in the price of Bitcoin. The ETH/USDT daily chart on TradingView shows that ETH is trading at $2,556. However, Ethereum is still above the key support level around $2,500.

Although Ethereum’s momentum is fading away, the fundamentals are still strong. Ethereum developers are still pushing to enhance the ecosystem with the Pectra upgrade going live last week. Market participants should thus monitor the price of Ethereum moving forward to determine the next steps. 

Crypto Sentiment Remains in the Greed Zone

Despite the recent correction, the crypto market sentiment is still in the greed zone. The Fear and Greed Index by CoinMarketCap shows a score of 71. This indicates that crypto investors are still optimistic. However, the increase in the difference between sentiment and price action is a warning for the overleveraged traders.

Nonetheless, several analysts view the current price dip across top cryptocurrencies as a structural pullback. It could help avoid excessive leverage and make the market conditions healthier. This suggests that the bullish momentum still prevails in the current market. A trend reversal will only be confirmed by a steeper price drop.