Cryptocurrency prices were back in the red on Friday and the global cryptocurrency market cap fell around 4% to US$2 trillion, after Bitcoin was once again rejected trying to reclaim the US$50,000 level.
Bitcoin’s price is currently down 6% from its weekly high of US$50,482 and Ethereum shed nearly 8% over the same period, with Ether’s price now at US$3,110.
The overall crypto market pullback was to be expected according to analysts across Asia, but keeping the party alive was Solana. The SOL token’s price hit a new all-time high earlier Friday morning, rising over 22% to US$84.04 over the last 24 hours.
Bitcoin dips, but fundamentals strong
Bitcoin’s US$50,000 price level was identified as a critical area for BTC to continue to push even higher by market analysts, but with rising prices also comes an opportunity for traders to take profits.
“For the past 30 days, BTC/USDT increased by nearly 20% from 39K to 47K, but has been struggling to stay above 50K. When it was approaching the 50K mark, on-chain data showed an increase in exchange inflows which could mean an increase in selling pressure,” Rolland Hoang, trader at Hex Trust, told Forkast.News in an interview.
The general crypto pullback over the last few days seems to be shared by most risk assets in macro markets broadly, according to Justin d’Anethan, head of global exchange sales at digital assets firm Eqonex.
“I would assign this dip to trading and speculation, rather than fundamentals and long-term investment. The narrative and the fundamentals really haven’t changed,” D’Anethan told Forkast.News. “Miners seem to still be holding coins, on-exchange reserves are low which suggests lower selling pressure, and stablecoin supply is plentiful. Things don’t go in a straight line and after many up sessions, in traditional markets and crypto, a chunk of the traders are understandably taking profit.”
The crypto market’s dip in value is not yet a major cause for concern and talks of an incoming bear cycle are premature, according to on-chain data.
“The market is structurally better positioned for Bitcoin than former rallies, with on-chain and derivative positioning much more balanced. Ethereum is more nuanced, with net exchange outflow balances slowing, indicating that the market sentiment could be waning,” said Toby Chapple, head of trading for ZeroCap, an Australia-based digital assets firm for private clients.
Chapple told Forkast.News that the looming Federal Reserve meeting at Jackson Hole, and the next month’s Federal Open Market Committee (FOMC) meeting may also be causing some pause to the crypto market’s bull narrative, as the market considers the possibility of a reduction in liquidity through the tapering of quantitative easing, which would inevitably cause ripples across global markets.
“What happens next could likely follow one of three scenarios,” said Hex Trust’s Hoang. “If BTC/USDT stays above 47K (200MA), we could see further upside with stable market dominance. If it trades sideways between 44K and 50K, we could expect a drop in dominance and altcoins showing strength. But if BTC falls below 44K it could consolidate in the 38K-41K range with an increase in market dominance.”
Solana price won’t stop
Solana has cemented its top 10 position with a market cap of over US$24 billion and appears to be on the verge of flipping decentralized finance (DeFi) rival Polkadot (DOT) for position 9 on CoinMarketCap’s rankings.
Solana has been marketed as a potential rival to Ethereum, which currently hosts the vast majority of DeFi, but SOL’s surge is backed by a slew of positive news including its entry into the NFT space and the recent launch of a cross-chain bridge called Wormhole.
Institutional interest in Solana is also beginning to peak, as Osprey Funds — a premier boutique digital asset investment firm — registered the Osprey Solana Trust with U.S. securities regulators Tuesday.
Osprey appears to have beaten Grayscale in the race to bring a Solana investment vehicle into the market. On Feb. 26, 2021, Grayscale published an initial list of assets which were being considered for inclusion in the Grayscale Trust.
Solana was one of the 13 additional assets that Grayscale announced it would be investigating to bring into its product family. Others included 1inch (1INCH), Bancor (BNT), Curve (CRV), Internet Computer (ICP), Kava (KAVA), Kyber Network (KNC), Loopring (LRC), NEAR (NEAR), Polygon (MATIC), Ren (REN), Universal Market Access (UMA), and 0x (ZRX).
The DeFi ecosystem on Solana is growing at an accelerating rate. Solana hosts a large community of high-end developers, and it is arguably the fastest blockchain.
“Solana’s rigor comes to the fore in the types of innovations that it boasts, it’s a typical example of a chain built on the shoulders of those who’ve gone before them,” Ben Caselin, head of research for AAX exchange, told Forkast.News in an interview. “At the same time, the project has been quick to respond to trends and when we look at the top projects on Solana, we can see high-quality projects such as Serum (DEX), Raydium (Liquidity provider), Step.Finance (Frontpage to Solana), Solible (NFT), Maps.me (Maps) and Audius (Music streaming platform).”
Solana does not appear to be slowing down any time soon and SOL’s price is currently hovering just under its all-time high posted at press time Friday.
