Cryptocurrency Market Analysis, December 16

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Arman Shirinyan

The SBF-approved coin is back on the upside, but you certainly shouldn’t celebrate it too much

Contents

  • Solana’s uptrend is in danger
  • Shiba Inu transaction count plummets

The cryptocurrency market has once again entered a downtrend following the cold shower launched by SEC Chairman Jerome Powell, who clarified that the regulator will continue his series of rate hikes until the desired inflation target is reached. Subsequently, Bitcoin plunged to $17,000, ETH fell to $1,200, and alternative currencies lost gains from the week.

Solana’s uptrend is in danger

Despite the massive breakout we witnessed in November, Solana has gradually moved higher and even entered a local uptrend despite dangerously high selling pressure. However, it’s too early to celebrate a reversal; Upside SOL entry could be part of a rising wedge, which is part of a continuation of the downtrend.

Solana graph
Source: TradingView

The most common reason behind the successful Solana reversal highlighted by analysts is the extent to which SOL is oversold now. The cryptocurrency approved by SBF and the reference network for NFT projects in 2021 was the most actively sold asset in the market during the exchange implosion.

Unfortunately, up to 100 million SOL could be held in the wallets of stakers who pulled their assets out of staking contracts in a panic after it became clear that SOL was the main, if not the only, source of liquidity for FTP extension.

The future of what used to be an Ethereum killer remains bleak as it is unclear how much SOL stakers will unleash on the market once the cryptocurrency industry’s volatility and liquidity returns to a normal level.

Shiba Inu transaction count plummets

The number of transactions on the meme token network hit a several-week low after the price per SHIB token fell to $0.000008 for the first time since November. The recovery in the Shiba Inu’s burn rate has not helped the price rebound off local price levels.

The reason behind the drop has nothing to do with the Shiba Inu himself, as there have been no major events surrounding the project or its token. The aforementioned 50bp rate hike fueled another correction in the market that hit alternative currencies like Shiba Inu.

SHIB has always been dependent on the trend of the market in general. Tokens and meme coins are virtually the most volatile assets in the market, and their growth usually signals a recovery in the demand for risk.

In the case of today’s market, the lack of action on meme assets is further confirmation of the virtually non-existent demand for risk. Investors are unwilling to gain exposure to assets that tend to swing from side to side and lose their value faster than more stable assets like Bitcoin or even Ethereum.

In general, the cryptocurrency market is still experiencing a massive migration of funds from the exchange to self-custody. By the end of this cycle, we could see the start of a real buildup that would become a foundation for the future recovery rally we’ve been waiting for since mid-2022.

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