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The global cryptocurrency market is once again showing signs of instability, slipping below the $4 trillion mark on Monday after briefly exceeding that psychological threshold last week. The dip comes on the heels of a regulatory-driven rally spurred by the signing of the U.S. GENIUS Act, which had pushed total crypto market capitalization to record highs.
According to data from multiple analytics firms, the market cap hovered around $3.98 trillion early Monday, down roughly 1.4% from Friday’s highs. Bitcoin, the largest digital asset by market cap, dropped slightly to $118,700, while Ethereum, XRP, and Dogecoin also posted modest losses.
Regulatory Effects Losing Steam
President Donald Trump’s signing of the GENIUS Act caused the market to surge in early July. —A landmark piece of legislation that provides federal-level regulation for stablecoins, the act was seen as a major crypto endorsement by the current administration. Market sentiment was initially optimistic, with predicted long-term growth and stability as a result of clearer U.S. policy.
However, the situation quickly changed. The correction, albeit a small one, followed almost immediately.
Bitcoin Dominance Falls
Notably, Bitcoin’s market dominance has declined to just over 59%, the lowest figure in more than a year. This shift indicates that many investors are rotating into altcoins such as Solana, which bucked the broader downtrend to post a nearly 4% gain on the day.
After a week-long correction that started after it failed to hold support above $7,000, Ethereum continued to slide, losing around 3.3%. Despite its central role in decentralized finance (DeFi) and Layer-2 improvements, ETH seems to be underperforming.
Analysts at CryptoMmaniaks continue to monitor the situation and are advising caution, at least until the dust settles and market trends become more noticeable.
Institutional Behavior Signals Caution
Despite their increased exposure to digital assets, institutional players seem to be taking a more cautious stance. Persistent inflation and the Federal Reserve’s lack of enthusiasm are affecting the decision-making process of hedge funds and wealth managers, causing them to act cautiously.
Altcoins in Focus
Even though the broader market continues to underperform, some altcoins are on the move. Solana, for instance, has seen a surge in trading volume thanks to new smart contract integrations and a spike in DeFi activity on its chain, which reignited hopes that it could rival Ethereum in the future.
Meme coins like Dogecoin and Shiba Inu, on the other hand, are underperforming. Dogecoin lost 1.6% Monday, continuing a month-long slide fueled by lack of speculative interest.
Meanwhile, XRP has dropped nearly 6% in the past seven days, with investors awaiting a final ruling in its long-standing case with the U.S. Securities and Exchange Commission.
Risk Still Persists
Despite increased signs of maturation, the cryptocurrency market remains highly volatile. Flash crashes caused by speculative trading, regulatory surprises, and hacks still present major risks to even seasoned investors.
According to reports, 2025 has already seen more than $2.1 billion in crypto-related thefts, like a recent breach at Indian exchange CoinDCX and a massive attack targeting ByBit. These incidents illustrate the desperate need for better security infrastructure and protocols.
Stablecoin markets are also adjusting to the GENIUS Act, which bans algorithmic and under-collateralized stablecoins. This may result in significantly decreased yields, and maybe even shift capital into more traditional segments and out of the crypto market entirely.
Conclusion
The latest dip of the market cap is not the first and certainly won’t be the last sign of crypto market volatility. However, the loss of value is not as drastic as some of the previous ones, which many experts interpret as an excellent signal for the future of the entire sector. While the volatility remains a significant factor, it is clear that the increased regulation is having a net positive effect on the market.
