What happened? Layer 2 tokens and major coins pulled back after a recent run.
The Layer 2 sector fell about 4.46%, led by big drops in Merlin Chain (-16.8%), Zora (-7.58%) and Mantle (-5.43%). Bitcoin slipped roughly 1% to around $113,800, and Ethereum fell about 2.5% below $4,000. A few pockets bucked the trend — Hedera jumped 6% ahead of a Nasdaq ETF listing and Trump-themed meme coins rallied nearly 10%.
Who does this affect? Traders, investors and token holders across the crypto market.
Short-term traders in Layer 2 tokens and other high-beta alts feel the biggest pain from the drop, while BTC and ETH holders see a milder pullback. Speculators in memecoins and projects tied to listings (like Hedera) experience sharper moves tied to news. Institutional and retail investors monitoring ETF flows and macro signals may rethink allocations as liquidity and sentiment shift.
Why does this matter? It changes market sentiment and could influence flows and prices in the near term.
A pullback after a strong run can knock out weak hands and create buying opportunities if liquidity and the macro backdrop stay supportive, which some analysts expect. Moves in Layer 2s and large caps affect overall market breadth and volatility, altering risk pricing and how funds allocate across crypto. Positive catalysts like potential ETF listings can attract institutional cash and help stabilize prices, so traders will be watching news and macro cues closely.