Memecoins powerhouse and major L1 blockchain network Solana experienced a significant market cap loss on Monday, coinciding with a 4% decline in the overall crypto market.

Solana (SOL) saw its value decrease by approximately $3 billion, falling to around $128. This marks a 10% drop over the past seven days and places it about 50% below its all-time high (ATH) reached during the 2021 peak.

Other major cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), BNB, XRP, Toncoin (TON), and Dogecoin (DOGE), also experienced declines of up to 10% over the last week amid a broad market downturn. The crypto fear and greed index recorded a neutral level of around 51 for the first time in over a month, indicating general uncertainty about the market’s future direction.

The crypto fear and greed index notched a neutral level at around 51 for the first time in over a month.

Historically, 30%-40% drops in the market are common, especially following Bitcoin halvings. Therefore, the ongoing market downswings are not unexpected.

According to TradingView, the total cryptocurrency market cap has grown by over 35% year-to-date (YTD). In comparison, the S&P 500 index has increased by just 15% over the same period.

Altcoin products recorded inflows last week, suggesting that investors and traders might be looking to “buy the dip” and capitalize on risk assets. This indicates an underlying appetite for investment despite the current market conditions.

Additionally, economic control measures deployed by the Federal Reserve are also a factor. Despite recent hawkish Federal Open Market Committee (FOMC) meetings, a rate cut in September remains anticipated.

Experts predict that the forthcoming Securities and Exchange Commission (SEC) approval for a spot Ethereum ETF could drive further growth. However, decentralized finance (DeFi) proponents remain skeptical about the positive impact of ETFs tracking spot prices on the on-chain ecosystem.

Moreover, the dynamics introduced by the Bitcoin halving are expected to deliver a supply shock. With block rewards halved and the existence of spot Bitcoin ETFs amidst growing demand, there may not be enough Bitcoin to meet eventual buying pressure. Analysts believe this phenomenon will drive prices higher.

Stay updated with the latest cryptocurrency news and trends by exploring more articles on Global Crypto News.

Post Views: 6