Bitcoin and Crypto Drop After Rally as Traders Take Profits and Geopolitical Risks Rise

Crypto Market Retreats as Profit-Taking and Geopolitical Concerns Pressure Prices

Crypto markets reversed their weekend gains on Monday as renewed tensions in the Middle East triggered a broader risk-off move. The decline came alongside a sharp 9.2% drop in South Korea’s Kospi index and approximately $253 million in leveraged crypto liquidations.

Bitcoin fell during Asian and European trading hours, slipping to around $63,100 after closing the weekly session above $64,300 at midnight UTC.

The move represented a decline of about 1% for bitcoin, while altcoins faced stronger selling pressure. Lighter (LIT) led losses, dropping 8% in its first major correction after climbing more than 200% over the previous two months.

Risk aversion spread across global markets as investors reduced exposure to higher-risk assets. South Korea’s Kospi plunged after SK Hynix, the memory-chip producer that recently debuted in U.S. markets, saw its shares fall 15%. Japan’s Nikkei and China’s SSE Composite also declined more than 2%.

The market weakness followed renewed U.S.-Iran tensions, with both sides carrying out airstrikes amid disputes surrounding control of the Strait of Hormuz.

U.S. equity markets were also expected to open lower, with Nasdaq 100 futures down 0.9% and S&P 500 futures slipping 0.25% since midnight.

However, bitcoin and the wider crypto market had entered the weekend on a stronger note, following a period of positive price action. Monday’s pullback may also reflect traders taking profits after the recent gains.

Derivatives Market Shows Stable Positioning

Bitcoin derivatives activity remained relatively steady despite the market decline. Open interest held near $17 billion, while the three-month annualized futures basis stayed around 3.8%.

Funding rates remained mostly unchanged and slightly positive across major exchanges, though Bybit was an exception, showing BTC perpetual funding near -13% on an annualized basis.

The combination of steady open interest, stable futures premiums, and balanced funding rates indicates that traders are maintaining their current exposure without significantly increasing leverage.

Options markets continued to show a bullish bias, with the 24-hour put/call ratio favoring calls at 64% versus 36% for puts. The one-week delta skew remained elevated at 16%, although it declined from 26% the previous week, suggesting that demand for bullish options has softened.

The volatility curve remained in contango, with short-term implied volatility around 34%-35% and longer-term expectations near 43% through mid-2027, suggesting traders anticipate relatively stable conditions ahead.

According to CoinGlass, total crypto liquidations reached $253 million over the past 24 hours. Long positions accounted for 76% of liquidated positions, while shorts represented 24%. Bitcoin recorded the largest share at $70 million, followed by Ethereum at $60 million.

The Binance liquidation heatmap identifies $62,000 as a key price level to watch if bitcoin continues to decline.

AI Tokens Hold Strong as Altcoins Face Selling Pressure

AI-related tokens FET and NEAR showed relative strength during the downturn, each gaining around 1.5% despite broader market losses.

Hyperliquid (HYPE) declined alongside the wider altcoin market, falling about 3.3% to $65.10, its lowest level since July 2.

CoinMarketCap’s Altcoin Season Index climbed to 56/100 from last week’s average of 50, suggesting investor appetite for risk assets has improved following months of market weakness.

Cardano (ADA) remained one of the most volatile large-cap cryptocurrencies. After suffering a 39% decline in June, ADA rebounded more than 40% in early July before reversing gains and falling 19% since July 4.

Jupiter (JUP), the Solana-based decentralized exchange token, also faced continued pressure, losing more than 15% over the past week. Its daily trading volume dropped to approximately $17 million, compared with much higher levels in 2025 when volumes frequently surpassed $500 million.