The cryptocurrency market is restless at midnight, and the small movements of whale wallets are sounding the alarm for altcoin trends.
With Japan's interest rate hike taking effect, the crypto market seems to have received a shot of adrenaline. In the past 24 hours, low market cap coins like LIGHT have suddenly surged, with a single-day increase of over 70%, and the explosive trading volume evokes the urgency of capital returning to risk assets.
What is more intriguing is that the whales have built short positions in the derivatives market, yet the funding rate stubbornly remains positive. This contradictory phenomenon suggests that bulls are temporarily in control, and a confrontation between bulls and bears is brewing, leading to greater volatility.
01 The Real Movements of Whales
On-chain data never lies. In the past month, while altcoins generally corrected by 15%-40%, whales quietly activated a 'buy, buy, buy' mode. Whales are quietly accumulating positions in tracks like payments, Layer 1, DeFi, and AI + data, with some coins' accumulation intensity even hitting new highs for 2025.
The operating logic of these major market players is very clear: pullbacks are buying windows, buying more as prices drop, with little regard for short-term prices. They prioritize tracks with 'real income' or 'policy dividend certainty,' while maintaining moderate participation in high-risk, high-reward 'lottery zones' like meme coins.
Whales are not a monolith. Research from VanEck shows that long-term holders of Bitcoin for over five years continue to hold, while selling pressure mainly comes from medium-term holders. The number of addresses holding over 1,000 Bitcoins recently surpassed 1,670, the highest level since early 2021.
02 Anomalous Signals in the Long-Short Contest
When smaller coins like LIGHT lead the charge, a rare divergence appears in the derivatives market. The accumulation of short positions by whales contrasts sharply with positive funding rates, suggesting that the market may be brewing a larger wave of volatility.
Behind this contradictory situation is a struggle between two forces: on one side, whales are quietly accumulating positions through over-the-counter transactions and splitting orders, while on the other side, they are hedging in the derivatives market. Large holders typically split trades or use over-the-counter platforms to mitigate the obvious impact of 'wallet fluctuations.'
Speculative activities in the futures market have recently reset. The open interest in Bitcoin futures has sharply declined, and significant drops in funding rates are typically associated with oversold conditions. The current net unrealized profit/loss ratio (NUPL) has reached a tactically oversold level, comparable to the levels during the tariff crisis in spring 2025 and the sharp decline of the yen in August 2024.
03 The Logic Behind Altcoin Explosions
The strong performance of LIGHT is not an isolated event. Bitlight, as a Layer 2 solution for Bitcoin, aims to bring smart contract capabilities and fast transaction capabilities to Bitcoin through the integration of RGB protocol and the Lightning Network. This project recently completed a $9.6 million Pre-A round of financing, led by well-known investors such as Amber Group and Fundamental Labs.
Low market cap coins have unique advantages in specific market environments. Smaller coins are more likely to become the first choice for incremental funds seeking undervalued, resilient targets, especially during periods of sideways consolidation of mainstream coins.
The performance of Sophon Network also confirms this trend. This project focuses on building high-performance Layer 2 networks using ZK Stack technology, aiming to make complex blockchain technology 'invisible.' Its token SOPH has also performed well recently, forming the first tier of altcoin trends alongside LIGHT.
04 My Analysis and Suggestions
From on-chain data, I believe the current market is in an accumulation phase. The hoarding behavior of whales contrasts sharply with the hesitation of retail investors, and this divergence usually indicates that the subsequent market conditions will not be dull.
My advice is: stay cautiously optimistic and prioritize projects with real ecological progress. For explosive coins like LIGHT, do not blindly chase highs, but pay attention to their technical substance and ecological progress.
Risk control is the top priority in the current market. Positive funding rates coupled with high leverage can easily trigger a short squeeze, and once the trend reverses, the decline may far exceed expectations. Investors should strictly control their positions to avoid being washed out during extreme volatility.
As market sentiment warms, those high-quality projects that were wrongly sold off during the downturn are now seizing recovery opportunities. Data shows that the Bitcoin balance on exchanges has dropped to approximately 2.83 million coins, a six-year low. The reduced tradable supply means that any large orders could have a greater impact on prices.
Can this altcoin frenzy be sustained? The answer may lie in the trends of BTC and ETH. As barometers of the market, their movements will determine the sustainability of risk appetite. Right now, the market is like a taut bowstring, with both sides waiting for the next decisive moment.
Which track do you think is most likely to explode next? Feel free to share your thoughts in the comments section. Don't forget that the most exciting stories often lie within on-chain data.
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