Altcoin Market Holds Support as Bitcoin Recovers and DeFi Manipulation Drives Caution

• Kaiko research shows Bitcoin rebounded 3% last week as equities and altcoins faced mixed signals.
• DeFi market risks grew as Uniswap sandwich attack and Hyperliquid spoofing led to multi-million losses.
• Total3 index consolidates near $876B, with technicals signaling volatility and key altcoin levels ahead.

Kaiko’s latest research highlights a 3% rebound in Bitcoin last week, marking a rare move against its recent downtrend. 

Traditional equities like the S&P 500, by contrast, hovered near correction territory, signaling diverging trends between digital assets and legacy markets..

Altcoin Segment Faces Pressure as DeFi Risks Grow

Altcoins struggled to keep pace with Bitcoin, weighed down by persistent market manipulation, regulatory uncertainty, and Ethereum’s lackluster performance. Kaiko shed light on persistent market manipulation plaguing decentralized finance. Notably, a sandwich attack on Uniswap V3 led to a $215,000 loss for a user swapping USDC to USDT. 

This type of manipulation, often compared to high-frequency trading in legacy markets, thrives in low-liquidity environments. Similarly, spoofing behavior on Hyperliquid last week triggered an intentional $200 million ETH liquidation, leading to a $4 million loss for the vault and new margin requirements for leveraged traders. 

These events show that while blockchain data aids in detection, DeFi remains largely unregulated, keeping institutional investors wary.

Ethereum Lags as Traders Eye Pectra Upgrade and Historical Patterns

Ethereum’s performance remains subdued, with the token down nearly 40% year-to-date and underperforming both Bitcoin (-14%) and Solana (-35%). The ETH/BTC ratio now sits at a multi-year low of 0.023. 

Though the upcoming Pectra upgrade, the largest EIP rollout yet, holds promise, traders remain skeptical. Historical patterns suggest Ethereum upgrades often lead to “sell the news” events, and current implied volatility data implies hedging around the launch.

However, the long-term fundamentals remain intact. Ethereum continues to dominate tokenized asset issuance and hosts over $110 billion in stablecoins–its highest since 2020. 

Altcoin Market Consolidates as Total3 Tests Support

The Total Crypto Market Cap Excluding BTC and ETH (Total3) sits at $876 billion, showing signs of consolidation. 

A Fibonacci retracement from the recent swing low of ~$784 billion to the high of ~$966 billion reveals price rejecting near the 0.618 level ($897 billion), a strong resistance area. The 0.5 ($875 billion) and 0.382 ($854 billion) zones are now acting as support and potential re-accumulation ranges.

The Relative Strength Index (RSI) hovers around 55, just above neutral. It previously hit a local high near 65, indicating bullish strength but also hinting at short-term exhaustion. A move above 60–65 could signal renewed momentum and a breakout toward $966 billion and potentially the 1.618 Fib extension at $1.08 trillion

The MACD remains slightly bullish with a minor positive histogram, but momentum is flattening. A cross to the downside could invalidate bullish potential. 

Meanwhile, the Bollinger Bands (BB) show price contracting slightly, suggesting a volatility squeeze. A breakout from this range could set the tone for the next major move.

If support at 0.5 ($875 billion) breaks, Total3 may fall back to test the 0.382 ($854 billion) or even the 0.236 ($827 billion) levels, increasing risk across mid and low-cap altcoins.

However, sustaining above $897B and pushing through $966B would clear the path to $1.08 trillion, a psychological and technical resistance that could trigger a broader altcoin rally.