Powerhouse Memecoins and the top-tier Solana mainnet lost billions in market capitalization on Monday, as the entire cryptocurrency market fell by more than 4%.
Solana (SOL) lost nearly $3 billion in value and fell to about $128, down 10% in the past seven days and about 50% away from its all-time high (ATH) set during the previous 2021 peak.
Other major cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), BNB, XRP, Toncoin (TON), and Dogecoin (DOGE), also fell by as much as 10% in the past week amid a broad market decline. The Cryptocurrency Fear and Greed Index reached a neutral level at around 51 for the first time in over a month. In other words, the general cryptocurrency sentiment is uncertain about the market’s direction, whether bullish or bearish.
Where is the market headed?
Observing previous cycles, a 30% to 40% decline is common, especially after the Bitcoin halving. Therefore, the continued decline in the market is not surprising.
Furthermore, according to TradingView, the total market capitalization of cryptocurrencies has increased by more than 35% year-to-date. In comparison, the S&P 500 rose just 15% over the same time period.
As crypto.news reported, altcoin products also recorded inflows last week. This may indicate a desire to “buy the dip” from investors and traders interested in higher-risk assets.
There is another factor to consider in the economic control measures implemented by the Federal Reserve. Despite recent hawkish Federal Open Market Committee (FOMC) meetings, a September rate cut remains the expectation.
Experts expect the upcoming SEC approval of the Ethereum exchange-traded fund to spur further growth. However, decentralized finance (defi) proponents remain unconvinced about how ETFs that track spot prices will positively impact the on-chain ecosystem.
Additionally, the dynamics introduced by the Bitcoin halving are set to cause a supply shock. With block rewards halving, and spot Bitcoin ETFs existing as demand grows, there is not enough Bitcoin to meet the eventual buying pressure. Analysts believe that this phenomenon will lead to higher prices.