Crypto Slips as Profit-Taking and Middle East Risks Trigger Market Pullback

Crypto markets gave up their weekend gains on Monday as renewed geopolitical tensions in the Middle East sparked a wave of risk aversion. The downturn coincided with a sharp 9.2% decline in South Korea’s Kospi index and roughly $253 million in liquidated leveraged crypto positions.

Bitcoin moved lower during Asian and European trading sessions, falling to around $63,100 after closing the weekly period above $64,300 at midnight UTC.

The decline was relatively modest for bitcoin at about 1%, but altcoins experienced more significant selling. Lighter (LIT) suffered the largest drop, declining 8% in its first major pullback after gaining more than 200% over the last two months.

The sell-off extended into traditional markets as investors reduced exposure to risk assets. South Korea’s Kospi plunged after SK Hynix, the memory-chip manufacturer that recently listed in the U.S., dropped 15%. Japan’s Nikkei and China’s SSE Composite also fell by more than 2%.

Market sentiment weakened as tensions between the U.S. and Iran escalated, with both countries exchanging airstrikes amid ongoing disputes over the Strait of Hormuz.

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

The decline followed a strong performance for bitcoin and the broader crypto market heading into the weekend. Analysts noted that some of Monday’s selling pressure may have been driven by investors taking profits after the recent rally.

Bitcoin Derivatives Remain Balanced Despite Volatility

Bitcoin derivatives markets showed little disruption despite the price decline. Open interest remained steady at approximately $17 billion, while the three-month annualized futures basis stayed near 3.8%.

Funding rates were mostly stable and slightly positive across major exchanges, although Bybit recorded BTC perpetual funding rates of around -13% annualized.

Stable open interest, firm futures premiums, and balanced funding conditions suggest traders are maintaining existing positions without aggressively increasing leverage in either direction.

Options markets continued to lean bullish, with the 24-hour put/call ratio favoring calls by 64% to 36%. The one-week delta skew remained elevated at 16%, though it has eased from 26% the previous week, suggesting bullish options demand has cooled.

The implied volatility curve remained in contango, with short-term volatility expectations around 34%-35% and longer-term volatility near 43% through mid-2027, indicating traders expect relatively stable market conditions over time.

CoinGlass data showed $253 million in crypto liquidations over the past 24 hours, with long positions accounting for 76% of losses and short positions making up the remaining 24%. Bitcoin recorded the highest liquidation volume at $70 million, while Ethereum followed with $60 million.

The Binance liquidation heatmap points to the $62,000 level as a key area to monitor if bitcoin faces additional selling pressure.

AI Tokens Outperform as Broader Altcoin Market Weakens

While most of the market declined, AI-focused tokens Fetch.ai (FET) and NEAR Protocol (NEAR) showed resilience, each gaining around 1.5%.

Hyperliquid (HYPE) also moved lower, dropping about 3.3% to $65.10, marking its lowest price since July 2.

CoinMarketCap’s Altcoin Season indicator rose to 56/100 from last week’s average of 50, reflecting a gradual improvement in investor risk appetite after months of heavy market declines.

Cardano (ADA) remained among the most volatile major cryptocurrencies. After falling 39% in June, ADA recovered more than 40% in early July before reversing lower and declining 19% since July 4.

Jupiter (JUP), the Solana-based decentralized exchange token, continued to struggle, losing more than 15% over the past week. Daily trading volume also dropped to around $17 million, compared with periods in 2025 when activity regularly exceeded $500 million.