The post Overleveraged Markets Delay Altseason as Liquidation Cycles Trap Traders appeared on BitcoinEthereumNews.com.

TLDR: Positive funding rates signal overcrowded long positions that trigger cascading liquidation events Altcoins face constant sell pressure from thin liquidity, high volatility, and token emissions Market makers exploit overleveraged positions by selling into panic during liquidation cascades Sustainable altcoin rallies require cleared leverage and bearish sentiment before genuine recovery Altseason remains elusive as cryptocurrency markets face pressure from excessive leverage rather than retail investor absence. Market analyst Wimar highlighted how crowded long positions and positive funding rates create cyclical liquidation events.  The pattern forces altcoins into prolonged downtrends despite periodic recovery attempts. This dynamic has trapped traders in a repetitive cycle of losses and false bottoms throughout recent weeks. Leverage Liquidations Drive Altcoin Price Decline Cryptocurrency analyst Wimar posted on social media platform X that overleveraged positions explain current altcoin weakness.  Alt funding rates turned sharply positive over recent weeks. This indicates too many traders opened long positions with borrowed capital. When markets become overly concentrated on one side, even minor price dips trigger cascading liquidations. THIS IS WHY ALTSEASON IS A LIE RIGHT NOW People keep saying retail is gone, but that is not the real reason. Alts are bleeding because leverage got way too crowded, and the market is flushing it. Over the last few weeks, alt funding went hard positive. That means the same… pic.twitter.com/LabnPX78P4 — Wimar.X (@DefiWimar) January 2, 2026 The liquidation cascade begins when initial price drops force leveraged long positions to close automatically. Stop-loss orders activate simultaneously across the market.  Market makers then sell into the panic, accelerating downward momentum. Spot buyers enter at perceived bottoms but face further declines as the cycle continues. Altcoins serve as primary targets for this strategy due to structural vulnerabilities. Thin liquidity makes price manipulation easier compared to major cryptocurrencies.  High volatility amplifies price swings in both…

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Filed under: News - @ January 2, 2026 2:25 pm