Solana Rally Loses Steam While BTC Holds Its Ground

Solana Rally Loses Steam While BTC Holds Its Ground

 Published: November 15th, 2023

After an impressive climb last week (wc 6th November), Solana’s rally has begun to ebb. Data from CoinGecko shows the seventh biggest coin by market cap was down nearly five per cent between Monday 13th November and Tuesday 14th November, when it traded hands at USD 55.38.

Last week, the Ethereum upstart saw a surge in price that set it apart from every other coin and token over the previous 30 days. For the first time since May 2022, SOL's price shot past USD 50. Analysts said that the spike was probably due to a squeeze created by short sellers exiting their positions and institutions showing more interest in Bitcoin alternatives.

Even with the dip seen at the start of this week, Solana remains up by more than 40 per cent over the previous seven days.

Bitcoin, the number one cryptocurrency by market capitalisation, was down one per cent on Monday morning and trading at USD 36,829. Number two digital asset Ethereum (ETH) was up by close to two per cent and trading for USD 2,095.

Ethereum received a big boost last week and pushed past USD 2,000 for the first time in months on news that BlackRock had made an application to list an Ethereum Trust under its iShares brand.

As Solana’s rally cools, several of its altcoin peers are experiencing gains.

Leading the charge is FIL, the native token of decentralized storage provider Filecoin. FIL was up nearly ten per cent between Monday and Tuesday and priced in at USD 5.32. Data from CoinGecko shows it has shot up in value by 23 per cent over the past seven days.

Filecoin’s owners, Protocol Labs, are hosting a LabWeek23 event in Istanbul this week, which might explain some of the recent surge.

SOL’s November rise begins to cool

At the beginning of November, Data from CoinGecko tracked a jump of over seven per cent for SOL from Monday 30th October to Tuesday 31st, trading at USD 34.77.

Solana, which had been tarnished by its association with the FTX scandal and saw price dips each time it was mentioned at FTX founder Sam Bankman-Fried's trial, shot up by 20 per cent over the seven days leading up to 31st October.

Other altcoins saw gains as well. XRP’s price was up nearly five per cent on 1st November, changing hands for USD 0.55.

Avalanche, sitting at 20th on the top digital asset by market cap list, was up over three per cent. Like Solana it had posted steady gains over the previous seven days, putting it up by 17 per cent.

Meme coin Pepe was also on the rise. The newest addition to the top altcoin performers list was fetching USD 0.00000120 on 31st October, representing a nearly five per cent rise in 24 hours. For the previous seven days, it topped the high-performers list with a price jump exceeding 60 per cent.

Most cryptocurrencies experienced price gains over the seven days up to 31st October as traders and investors opened new positions on optimism that SEC approval for a Bitcoin spot exchange-traded fund (ETF) was imminent.

Some of the biggest names on Wall Street have submitted applications to the financial watchdog for a BTC ETF product. After dragging its feet and losing a series of legal challenges, analysts now believe it's a foregone conclusion that SEC regulators will green light the first ETF.

Troubled SOL mounts a comeback

Last November, Solana was on the defensive when figures from Alameda Research showed plunging prices for SOL, which lost more than half of its value in the aftermath of the FTX liquidity debacle.

Most major coins saw their value drop significantly in the week following the closure of popular exchange FTX. Its collapse cratered confidence in the wider crypto market. Solana was hit particularly hard due to its close ties to FTX and embattled founder Sam Bankman-Fried.

On Tuesday 15th November 2022, the Solana Foundation revealed the extent of its financial links to both, saying that it had roughly USD one million in cash or other assets on the exchange before FTX stopped processing customer withdrawals on 6th November 2022. Pending the results of FTX’s bankruptcy proceedings those assets were held in legal limbo for an extended period. The Foundation noted, however, that the sum amounted to less than one per cent of its funds.

More worrying was the revelation that the Solana Foundation held more than 3.2 million shares of FTX, next to more than 3.4 million FTT tokens and 133 million SRM tokens from the Project Serum decentralized exchange (DEX), another one of Bankman-Fried's businesses.

At time, the FTT tokens were valued at about USD 4.34 million, while the SRM tokens were valued at around USD 29.2 million. Both tokens saw their prices plunge in the initial FTX furore. On Monday, November 7, Solana’s hoard of FTT tokens were worth about USD 75.4 million, while SRM tokens were worth over USD 100 million.

A blog on the Solana website explained that FTX and its affiliated crypto trading firm Alameda Research, owned more than 50 million SOL, which were valued at roughly USD 707 million at time of writing. A sizeable proportion of that SOL is held in a monthly unlock schedule that extends to the year 2028.

Many analysts believed Solana could be permanently tarnished by its FTX and Bankman-Fried associations. The high-flying coin has already seen its value impacted by controversy related to crypto personalities.

In March 2022, SOL was caught up in a rout of Layer 1 network coins that took down market leaders like Terra and Cosmos, which all suffered drops of five per cent or more.

The sudden drop was triggered by an announcement by Fantom Network that key developer Andre Cronje would be leaving the DeFi leader. Fantom saw its value sink by 12 per cent on news of his departure.

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