The total market capitalization of Crypto Assets has fallen below $3.9 trillion, and Bitcoin has dropped below $120,000! A wave of profit-taking is coming, is the bull run over or is it a healthy pullback?

Affected by profit-taking after Bitcoin reached a historic high, the cryptocurrency market saw a widespread pullback on Wednesday. The total market capitalization evaporated by 6.9% in a single day to $3.9 trillion, with liquidation exceeding $786 million. Bitcoin is currently priced at $118,000, while Ethereum (ETH), Ripple (XRP), and Solana (SOL), among other mainstream tokens, fell between 3.3% and 10.8%. Three key factors drove the decline: investors locking in profits from BTC, capital rotation betting on the arrival of altcoin season, and ongoing outflows from Bitcoin spot ETFs for three consecutive days. Despite the market pressure, the cryptocurrency fear and greed index still indicates "greed." Analyst Arthur Hayes even predicts that BTC could reach $250,000 by the end of the year, suggesting that the current pullback may just be a pause in the bull run.

Market Overview: Mainstream Tokens Generally Decline, Get Liquidated Amount Soars

After Bitcoin reached a historical high of $123,000, the crypto market experienced a broad pullback this Wednesday. As of the time of writing, Bitcoin is trading around $118,000, having lost the key support level of $120,000 from last week. All top ten cryptocurrencies by market capitalization have declined: ETH fell 3.3% in 24 hours, XRP plummeted 10.8%, and SOL dropped by 8.1%. According to CoinGlass, over $786 million was liquidated across the network in the past 24 hours, with long positions accounting for over 70%, reflecting significant losses for leveraged traders during the pullback.

Analysis of the Causes of the Decline: Three Major Pressure Resonances

1. Profit-taking wave emerges: Bitcoin faced massive sell-offs after reaching an all-time high on July 14, plummeting to $116,000 within 24 hours. Although the inflow of funds into the Spot ETF had previously helped push the price back to the $120,000 mark, it has recently continued to fluctuate between $117K and $118K, with upward momentum significantly weakened. According to on-chain data from IntoTheBlock, the price correlation of alts like Ethereum, XRP, and SOL with BTC exceeds 0.75, and Bitcoin's pullback directly drags down the altcoin market.
2. Expectations for Altcoin Season Heat Up: The current altcoin season index is at 41 (full score 100), still away from the threshold value of 75 for a "formal altcoin season." However, the index touched a high of 59 last week, signaling initial signs of capital rotation. Some traders have chosen to close their Bitcoin profit positions early to prepare ammunition for potential altcoin trends, intensifying the selling pressure on mainstream tokens.
3. ETF Fund Continues to Flow Out: Bitcoin Spot ETF has recorded net outflows for three consecutive days, with a total withdrawal of $285 million over the three days, in stark contrast to the record inflow of $6.6 billion earlier this month. This suggests that some institutional investors are choosing to take profits or wait on the sidelines in an environment of increased volatility. The ETF trends serve as a barometer of institutional confidence; the outflow of funds not only directly pressures the market but also undermines retail investors' confidence in holding coins. Coupled with the global economic uncertainty triggered by the potential trade tariff adjustments in the U.S. on August 1, this further suppresses the preference for risk assets.

Bull run ending? Indicators suggest it's just a technical pullback

Despite short-term pressure on the market, multiple indicators show that the foundation of the bull run remains unshaken:

• Retail Sentiment Resilient: The Crypto Fear and Greed Index remains at a "Greed" level, unchanged from last week, indicating that retail investors have not turned to panic due to the pullback.
• Institutions remain optimistic in the long term: Renowned trader Arthur Hayes predicts that in the current macro environment, excess capital will continue to flood into scarce crypto assets. He maintains an optimistic price target of $250,000 for Bitcoin and $10,000 for Ethereum by the end of 2025, emphasizing that crypto assets are still the best tool for hedging against currency instability and long-term debt pressure.
• Technical support remains solid: Bitcoin's current price is still well above key moving averages, on-chain data shows that long-term holders (HODLers) have not engaged in large-scale sell-offs, and exchange reserves remain low, accumulating momentum for a future rebound.

Conclusion: The recent pullback in the crypto assets market is primarily driven by profit-taking and the demand for capital rotation, with a brief outflow of ETF funds and macro uncertainties amplifying volatility. However, the core sentiment indicators in the market have not turned pessimistic, and institutions maintain a strong bullish stance in the long term, with on-chain data also not showing signs of a collapse. Investors should focus on signals of a reversal in Bitcoin spot ETF fund flows, whether the altcoin seasonal index can break through the critical point, and the strength of support in the $115,000-$117,000 range. If buying power recovers in a timely manner, a revisit to previous highs for mainstream tokens is expected, and the current volatility may be a healthy turnover phase in the bull run.