The altcoin market continues to show a steady decline, raising questions among market participants. An expert known as NoLimit explains that the pressure is formed not by retail investors exiting, but by structural factors related to borrowed financing. The main cause of the movement is linked to funding rate dynamics and the abundance of borrowed funds, which shifts the balance of supply and demand.
Reasons Behind the Altcoin Decline
According to researchers, in recent weeks funding rates for altcoins have turned sharply positive, indicating dominance of long positions. At the same time, the number of open trades increased, which heightened market vulnerability during price pullbacks. This combination of factors creates downward pressure on prices without requiring external negative news to develop the bearish trend.
The Role of Leverage in the Market Decline
The rise in leverage has led to the buildup of excessive risk: with a high share of longs, even a small downward move can trigger a chain of liquidations. Overleveraged long positions are forcibly closed, further accelerating the decline and triggering stop orders. As a result, the forced selling process repeats, intensifying the downward momentum.
Current Market Situation
According to researchers, open interest on the market has started to decline, while long position liquidations are occurring aggressively. Meanwhile, active buyers on the spot market are almost absent, and excess leverage is gradually being flushed out of the system. These signals point to a position-clearing phase rather than a mass exit of retail investors.
Altcoin Market Outlook
The researcher notes that deleveraging is viewed as a necessary stage of the market cycle since sustained growth is unlikely while long positions dominate. Clearing excessive leverage reduces systemic risks and has historically preceded more stable market phases. The current focus remains on reducing excessive exposure and balancing participant positioning.
Why This Matters
For miners with small-scale equipment pools, changes in the altcoin market do not directly affect farm operations but impact the liquidity and volatility of assets you can sell. During aggressive liquidations, spot demand decreases, which can complicate quick realization of mined cryptocurrency at expected prices. Understanding that the decline is driven not by retail investor exits but by excessive leverage helps gauge how long the period of heightened volatility might last.
What to Do?
If you mine in Russia and manage from one to a thousand devices, it is useful to align your positioning with the current market situation. Below are concrete steps to help reduce loss risks and maintain flexibility amid instability.
- Reduce the use of borrowed funds: lowering leverage cuts the risk of forced sales during pullbacks.
- Monitor funding rates and open interest: rising positive rates indicate dominance of longs.
- Set more conservative stop orders and exit plans for part of your position to avoid cascading liquidations.
- Maintain liquidity reserves to cover temporary drawdowns and withdrawal fees.
- Consider phased selling of mined cryptocurrency or diversifying into more stable assets if you need to reduce exposure.
For broader context, you can compare current signs with previous cycles and analyst forecasts, for example in our 2024–2025 crypto market analysis and the article on key conditions for altcoin growth. These materials help identify indicators that usually precede market reversals and recoveries.