Key Takeaways:
The crypto market is going through a rough patch and Solana, the world’s fifth-largest cryptocurrency by market capitalization, has taken a pretty hard hit. The chief rival of Ethereum (ETH) has lost billions in value over the past week.
SOL has enjoyed a great revival since the second half of last year. The blockchain grew in popularity for offering low-cost and faster transactions, propelling it to levels only attained by ETH. Hundreds of memecoin and NFT projects started being deployed on the network, which helped raise its value.
Solana Losses 11% Market Value In Under A Week
At the start of the month, 1 SOL was trading for $170 after gaining over 100% in value since Q3 2023. However, as of Monday, June 22nd, Solana’s price slumped as low as $123.42.
SOL has declined by at least 11% in the past seven days, coinciding with the overall market slump that affected the value of other crypto assets as negative market sentiment swept across.
The market capitalization of Solana dropped from 67.69 billion to $57.97 billion at the start of the week. However, it has managed to recover some losses and is currently valued at $63.28 billion.
Solana’s steep decline can also be attributed to the lack of on-chain activity and stagnant demand for SOL from derivatives traders. The blockchain typically known for its high throughput and low transaction fees is constantly faced with network congestion.
Memecoin Frenzy Could Make Or Break Solana
The cryptocurrency has shown its resilience in the past to rebound from a downtrend, but experts are warning against the memecoin frenzy that’s currently taking place on the blockchain.
Andrew Kang, the co-founder of crypto-focused investment firm Mechanism Capital, said recent levels of meme coin trading are pulling Solana to both sides of the price spectrum. He predicts SOL to plummet to $80 if memecoin trading pauses for the next few months.
According to reports, at least 500,000 new meme coins were launched in the market in May alone, most of which were deployed on Solana. An increasing number of celebrities have also been using their brand to promote meme coins flooding the market.
For Solana, the beginning of the supposed end to its meme coin mania might be coming from an unusual place. Internet celebrity Andrew Tate, also known as “Top G”, recently threatened to crash the network.
He claimed to have burned over $38 million worth of his Solana-based memecoin TOP G, effectively removing 58% of its circulating supply, which caused its price to surge by over 130%, leaving the token with a market cap of $65 million. Although Tate claims he took no profits from this action, his intervention has disrupted the market.
To add salt to the wounds, in a recent X post, the marketing executive of Shiba Inu (SHIB), LucieShib, issued a major warning to the Solana community, especially those who participate in token airdrops, that most of the celebrity accounts posting SOL addresses might be fake.
Experts See The Potential For Solana-backed ETFs Once Proper Regulations Are Put In Place
On the other hand, pseudonymous crypto analyst ‘CryptoCapo’ told the members of his Telegram channel that he believes Solana, alongside the “Nvidia of crypto” – Render (RNDR), is likely to enter an uptrend soon. He asked his followers to add more to SOL and RNDR “longs”.
His confidence in SOL might have something to do with the possibility of a Solana-based exchange-traded fund (ETF) being launched in the coming years, pending regulatory approvals.
In an interview with CNBC last month, crypto investor Brian Kelly said Solana could be next in line, after BTC and ETH, to be launched as an ETF in the United States.
The US Securities and Exchange Commission (SEC) recently green-lit proposals from several ETF issuers, including BlackRock and Fidelity, to launch investment funds backed by ETH. The Ethereum spot ETFs could begin trading as soon as July.
Bloomberg’s ETF analyst James Seyffart followed up on Kelly’s claims by commenting under a related X post that this would happen within a few years of getting a crypto futures market regulated by the US Commodity Futures Trading Commission (CFTC). He added that the recently passed FIT21 crypto regulation could speed up the process.
Solana’s recent decline isn’t an isolated event. Other major cryptocurrencies like Ethereum (ETH), Cardano (ADA), and Binance Coin (BNB) have also suffered similar losses. Popular meme coins Dogecoin (DOGE) and Shiba Inu (SHIB) registered a 5% drop, while Bitcoin fell below $59,000 before rebounding to the $61,500 range.
At the time of writing, SOL is trading at $136.42 – up 0.05% over the last 24 hours.
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