Solana has surrendered an important level

Market Picture

The cryptocurrency market’s cap is 3% lower than a week ago. But even worse, the bulls have failed to form a reversal to growth over the past two weeks. The crypto market is forming a trend of lower local highs, showing a 14% decline over the last month. The $3.3 trillion level acts as local resistance, turning the market down.

At the same time, the sentiment index remains near neutral territory, as the selling pressure is very even. The overflow of cryptocurrencies from the wallets of retail investors to the portfolios of institutional investors probably plays its role. Such dynamics put increased pressure on some altcoins.

Bitcoin is approaching 95,000 and losing for the third day in a row. This is a dangerous decline towards the bottom of the February trading range and not far from the local lows of the last three months. That said, BTC has been trading mostly below its 50-day moving average since the 4th of February, suggesting a broken uptrend.

Things are worse for Solana. The coin fell below its 200-day moving average earlier in the week, which accelerated the sell-off. As a result, it is losing about 20% for the week and 40% over the last 30 days. Technically, a failure under the important average could be followed by a dip towards $130, the support area of April to September last year.

News Background

According to CoinShares, crypto fund investments fell $415 million last week after five weeks of inflows; the decline was the largest since early September. Bitcoin investments were down $430 million; Ethereum was down $7 million; Solana was up $9 million; and XRP was up $8.5 million. The outflows came after 19 weeks of inflows totalling $29.4 billion.

Analyst Omkar Godbole of CoinDesk notes that the most popular position on cryptocurrency exchange Deribit in February was bitcoin call options at $110,000 with an expiry date of 28 March.

According to Bernstein analysts, growing interest from banks, institutional investors and corporations is paving the way for BTC to compete with gold. With a capitalisation of $2 trillion, bitcoin is still significantly inferior to gold, which has an estimated market value of $18 trillion.

Prominent crypto analyst PlanB has shifted capital from bitcoin holdings to BTC-based spot ETFs, explaining that it is easier to manage assets like stocks. Messari co-founder Dan McArdle called it a mistake, noting that ETFs are suitable for speculation but not for ‘hedging against global fiat.’

The hype around meme coins on Solana has allowed insiders and infrastructure players to make between $3.6bn and $6.6bn, DeFi Llama calculated. However, negative consequences in the segment may undermine the development of the crypto industry.

The FxPro Analyst Team