Bitcoin Price Action Continues to Slide
The erratic price movements in the cryptocurrency market persisted on Tuesday, bringing bitcoin (BTC) closer to its lowest levels in several months. During the early afternoon trading session, bitcoin was priced at $93,600, reflecting a 2% decrease over the past 24 hours and a significant 10% drop for the week.
The broader cryptocurrency market, as assessed by the CoinDesk 20 Index, also experienced a downturn, falling by 4% within the same time frame. A notable contributor to this decline was a staggering 16% drop in the price of solana (SOL). This decline in solana’s value comes as the memecoin sector appears to have reached a critical juncture, potentially teetering on the brink of outright criminality, particularly following the recent rug pull incident linked to Argentine President Javier Milei. Over the past month, solana has plummeted by 35%, relinquishing all gains it made post-Trump election.
$500K Target Still in Play
Geoff Kendrick from Standard Chartered has previously projected that bitcoin could soar to $500,000 by the time Donald Trump completes his term in office. Despite the current lackluster price performance, Kendrick expressed optimism in a morning note on Tuesday, citing the recently released 13F filings that detail institutional ownership of spot bitcoin ETFs. He noted a shift in the buyer landscape from retail investors to hedge funds, and now banks and sovereign funds are entering the fray, with increased ETF stakes from major players like Goldman Sachs and the initial bitcoin ETF purchase by Abu Dhabi.
Kendrick stated, “Looking ahead, we anticipate a growing influx of long-term, buy-and-hold capital entering the bitcoin market, with the Abu Dhabi investment marking the beginning of much greater involvement from sovereign entities.”
Solana Faces Significant Challenges
Tokens associated with the Solana trading ecosystem have not escaped this turmoil either. Decentralized exchange tokens such as Raydium (RAY) and Jupiter (JUP) suffered double-digit losses today, while the liquid staking service Jito (JTO) saw a decline of 7%. All these tokens are now down over 30% from their highs recorded on Friday.
The Solana ecosystem, which has previously flourished as a hub for memecoin trading and new token launches, is now grappling with the repercussions of the LIBRA scandal. This latest controversy involved a pump-and-dump token launch that has put several prominent figures in the Solana space, including Argentina’s President Javier Milei, under scrutiny.
LIBRA was launched on Friday and quickly surged to a $4 billion market capitalization following Milei’s X post, which claimed the project would support small and medium-sized enterprises in Argentina. However, the token’s value plummeted as insiders liquidated their holdings worth $100 million, leading Milei to retract his support. Now, he faces fraud charges and potential impeachment, while Ben Chow, co-founder of the Solana-based DEX Meteora, has resigned amid the fallout from the token launch.
“This is yet another troubling chapter emerging from Solana’s memecoin landscape,” remarked Alex Thorn, head of firmwide research at Galaxy, in a Tuesday note. The report highlighted that sentiment towards memecoins has been waning since the introduction of the TRUMP token.
In addition to these challenges, the impending SOL unlock event, which will increase the circulating supply of tokens, adds another layer of uncertainty to the market. Estimates vary regarding the precise number of tokens to be released, but one hedge fund analyst has projected that approximately 15.725 million SOL, valued at around $2.5 billion at current prices, will be unlocked over the next three months, primarily from the FTX estate holdings.
Tokenomist analysts noted, “If such a large-scale unlock occurs, it could significantly alter the circulating supply of $SOL and thereby influence market dynamics. Historical precedents of significant token unlocks often lead to increased price volatility. However, it’s crucial to highlight that the exact size and final date of the unlock remain undisclosed by any official source.”
