Markets
Crypto Market Takes a Stand on Solana ETF
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Hello and welcome to the FT Cryptofinance newsletter.
The arrival of Ether ETFs on U.S. markets this week has raised the question: what will be the next cryptocurrency?
The common consensus is on solana, which is based on the blockchain of the same name.
It is advertised as a faster and cheaper competitor to Ethereum and can be used to handle the high volumes of payments that traditional finance typically handles.
Summing up the excitement was traditional US fund manager Franklin Templeton, a brand not many people easily associate with cryptocurrencies, who described Solana as one of the “exciting and important developments that we believe will move the cryptocurrency industry forward.”
This is a remarkable achievement for a token whose market capitalization of $82 billion makes it the third-largest cryptocurrency excluding stablecoins, although it still represents only 3 percent of the overall cryptocurrency market value.
Solana made a comeback two years ago, when she was best known for her frequent interruptions and being backed by Sam Bankman-Fried (who?). Now she’s attracting attention from two different groups.
It’s a great place to launch meme tokens based on dogs, animals, or parodies of political figures, because it can handle the large amounts of trades these coins attract. In recent weeks, some of its most traded tokens have been those following the fortunes of Kamala Harris and Joe Biden.
On the other hand, it is also used to tokenize real-world assets such as US Treasuries. This week, Hamilton Lane, an investment manager with over $920 billion in assets, launched a private credit fund on the solana blockchain.
The Securities and Exchange Commission must now make a decision on a Solana ETF by March of next year. VanEck and 21Shares filed with the SEC in early July.
The growing confidence that this will pass comes from the SEC’s unexpected approval of ether ETFs in May. The industry had taken the agency’s lack of commitment as a clear signal that the multitude of applications would be rejected en masse, because ether could be used to earn a return, functioning much like a stock.
But the SEC sidestepped the issue by preventing ETF issuers from earning a return; once they overcame that and got regulator approval, things changed.
This change of direction does not make a Solana ETF a formality. For many years, the SEC rejected spot bitcoin ETFs on the grounds that it had concerns about manipulation of the underlying market.
Bitcoin and, later, ether, futures markets at the CME, a federally regulated exchange, have done much to put this concern to rest. However, there is no CME futures market for solana.
“It cannot be approved [by March] “Unless there is a market that is acceptable and explorable for the SEC, and there currently isn’t one,” said Katalin Tischhauser, head of research at Sygnum Bank.
Even more concerning is the fact that last year the SEC filed lawsuits against Binance US, Kraken, and Coinbase, claiming that Solana is an unregistered security.
Nonetheless, it is indicative of the ethos of the cryptocurrency market that these are not seen as insurmountable obstacles, but as obstacles to be overcome.
The main hope is that a Donald Trump victory in November’s U.S. presidential election will lead to a change of tone at the SEC. The regulator last month closed an investigation into potential ether sales as securities transactions, raising hopes that it might also reverse its stance on Solana.
Matthew Sigel, head of digital asset research at VanEck, confirmed to X that his firm’s presentation was a bet on Trump’s victory. Cryptocurrency legislation in Washington could also solve the problem. But with a March deadline, “a lot of things have to change and they have to change very quickly,” Tischhauser said.
But while March is still too early, the issue of a Solana ETF represents a turning point for both the industry and the regulator.
It can be argued that Bitcoin is digital gold and is worth holding for diversification and as a speculative asset. Ether is still the main play on the development of the cryptocurrency market as an alternative to the current plumbing and infrastructure of the financial system. ETFs on both were simpler cases.
As the third largest cryptocurrency, solana’s name is much less known outside the industry. After that, there is a very long tail of increasingly speculative projects with thinner liquidity and less maturity. This makes them less attractive as a basis for additional crypto ETFs and increases regulators’ unease about the integrity of the underlying market.
Like ether, solana can be used to generate returns, so in theory the regulator should be comfortable with the concept. A successful application will likely depend on market demand.
“There is so much excitement for [solana] as a core technology as much as ‘I want something different for my portfolio,'” said Adam Levine, head of corporate strategy at Fireblocks.
However, there were two days of net outflows in spot Ethereum ETFs in the first three days of trading, suggesting that institutional interest is more muted.
What gave spot bitcoin ETF applications an unstoppable momentum were applications from traditional names like BlackRock and Fidelity. These names were later to the market to file cryptocurrency-related ETF applications than others. They have not filed for a solana ETF and until they do, it is unlikely to appear.
What do you think? Send me an email at philip.stafford@ft.com
Highlights of the week
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Coinbase Cryptocurrency Exchange he was fined £3.5m fine from UK regulator for providing payment services to over 13,000 ‘high-risk’ customers.
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Exchange-traded funds that invest directly in ether arrived in the U.S. this week and have raised about $108 million the first day of trading. BlackRock, Bitwise Investments, and Fidelity emerged as the early leaders. Since then, there have been a couple of days of overall outflows, as the price of ether has fallen sharply. However, it is still early.
Soundtrack of the week
The big bitcoin conference is coming up in Nashville this weekend, with Donald Trump giving the keynote address. Organizers had been in talks to have Kamala Harris, but she decided not to attend. She’s probably trying to juggle a lot of things all of a sudden. Whatever the reason, some people have taken it as a huge snub, including Tyler Winklevoss of Gemini Exchange. Write on X:
“The Biden-Harris administration has been waging all-out war on the crypto industry for 4 years… What do they do? They refuse. They can’t even take the first step and show up to start healing. Our industry won’t forget this. We will show no mercy in November.”
And finally . . .
Tonight is the opening ceremony of the Olympics. The French will have a long way to go to surpass James Bond and the late Queen Elizabeth II parachuting in the stadium. Good luck, my friends.
Cryptofinance was edited by Tommy Stubbington. To view previous editions of the newsletter, click Here
Your comments are welcome
Bitcoin AND Etherealalong with the rest of the top 10 cryptocurrencies by market cap, appear to be in hibernation on Thursday morning.
At the time of writing, the Bitcoin Price is still below $65,000 and 2.2% lower than it was this time yesterday, according to CoinGecko data. Things are worse for the Ethereum Pricewhich is 3.7% lower than 24 hours ago at $3,185.22. The drop in ETH’s price is identical to that of Lido Staked Ethereum (stETH), a liquid staking token for Ethereum.
In recent days, falling prices have led to the liquidation of derivative contracts worth $225 million, according to Coin glassAnd about half of that, about $100 million, was liquidated in the last 12 hours.
When a trader is liquidated, it means that their position in the market has been forcibly closed by an exchange or brokerage due to a margin call or insufficient collateral. Margin is especially important when it comes to leveraged positions, which allow traders to control a multiple of their deposit, such as opening a $10,000 position with only $1,000 in their account.
Now that Bitcoin has been in the red for three days in a row, there is a chance that the world’s oldest and largest cryptocurrency could sink even further, BRN analyst Valentin Fournier said in a note shared with Decrypt.
“Bitcoin has closed in the red for three days in a row, with one-way trading showing limited resistance from bulls. Ethereum had a slightly positive Monday with strong resistance from bears who have won the last two days,” he wrote. “This momentum could take BTC to the $62,500 resistance or even the $58,000 territories.”
Looking ahead, Fournier said BRN’s strategy will be to “reduce exposure to Bitcoin and Ethereum and find a better entry point after the dip.”
This is despite Federal Reserve Chairman Jerome Powell’s comments yesterday on interest rates being widely regarded as accommodating and indicative of FOMC rate cuts in September.
Singapore-based cryptocurrency trading firm QCP Capital said the rally in stocks, which sent the S&P 500 up 1.6% from Wednesday’s close, was not felt in cryptocurrency markets.
“Cryptocurrencies have seen a broad sell-off overnight and into this morning,” the firm wrote in a trading note. “The market remains poised as traders pay close attention to daily ETH ETF outflows and further supply pressure from Mt Gox and the US government.”
Meanwhile, the other top-ranking coins are showing mixed performance.
Solana (SOL) is down 7.2% since yesterday to $169.13. Things are even worse for its most popular meme coins. In the past 24 hours, the most popular meme coins Dogwifhat (WIF) are down 12% and BONK (BONK) is down 9%, according to CoinGecko data.
Their dog-themed competitor, Ethereum OG Dogecoin (DOGE), the only meme coin in Coingecko’s top 10, is down nearly 4% since yesterday and is currently trading at $0.1205.
XRP (XRP) dropped to $0.608, which is 7% lower than it was at this time yesterday.
Binance’s BNB Coin (BNB) has kept pace with BTC and is currently trading at $571, down 2.4% from yesterday. Toncoin (TON), the native token of The Open Network, is down just 0.4% over the past day.
This leaves the stablecoins USDC (USDC) and Tether (USDT), both of which are stable as they maintain their 1:1 ratio with the US dollar.
The Securities and Exchange Commission (SEC) will hold another closed-door meeting with Ripple on Thursday, as the market hopes for a possible resolution to the legal battle between the two entities.
However, the cryptocurrency market remains relatively bearish, with the price and trading volume of XRP down in the last 24 hours.
Ripple holders take no risk
At press time, XRP is trading at $0.60. The altcoin’s price has dropped 6% over the past 24 hours. During that time, trading volume was $27 million, down 27%.
The SEC met before with the digital payment company on July 25. While the outcome of that meeting remains unknown, the Sunshine Act Notice for Thursday’s meeting includes one additional topic of discussion from the July 25 closed meeting: the instituting and resolving injunctive relief. That has market participants speculating whether a settlement is imminent.
In an exclusive interview with BeinCrypto, Ryan Lee, Lead Analyst at Bitget Research, noted that:
“This meeting will discuss possible resolution options for the Ripple Lawsuit. The founder of Ripple Labs said that a legal settlement could be announced soon. If an official settlement plan is released, it could positively impact XRP’s price movement.”
However, an assessment of XRP’s price movements on a 4-hour chart shows a spike in bearish bias as the market awaits the outcome of this crucial meeting. Its Moving Average Convergence/Divergence (MACD) indicator readings show that its MACD line (blue) has crossed below its signal line (orange).
XRP 4 Hours Analysis. Source: Trading View
Traders use this indicator to gauge price trends, momentum, and potential buying and selling opportunities in the market. When an asset’s MACD is set this way, it is a bearish signal that suggests selling activity is outweighing buying momentum.
Additionally, the altcoin relative strength index (RSI), at 46.08, is currently below its neutral 50 line and in a downtrend. This indicator measures overbought and oversold market conditions for an asset.
To know more: How to Buy XRP and Everything You Need to Know
XRP 4 Hours Analysis. Source: Trading View
At 43.83 at the time of writing, XRP’s RSI suggests a growing preference among the market participants for tokin distribution.
XRP Price Prediction: Derivatives Traders Exit Market
The XRP derivatives market has also seen a decline in trading activity over the past 24 hours. According to Coinglass, derivatives trading volume has plummeted 18% and open interest has dropped 10% during that period.
Open interest refers to the total number of outstanding derivative contracts, such as options or futurethat have not yet been resolved. When it drops, traders close their positions without opening new ones. This is a bearish signal that reflects a lack of confidence in any potential positive price movement.
According to Lee, the outcome of the meeting with the SEC “would have a significant impact on the price movement of the token.” If the outcome is favorable, the price of the token could rise towards $0.75 in August.
To know more: Ripple (XRP) Price Prediction 2024/2025/2030
XRP 4 Hours Analysis. Source: Trading View
On the other hand, if no favorable resolutions are reached, the price could plummet to $0.50.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto strives to provide accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyAND Disclaimers They have been updated.
Bitcoin is now the dominant force in the cryptocurrency market, surpassing 53% of the total cryptocurrency market, a stronger share than it has been in the past three years.
Bitcoin’s market cap now stands at $1.27 trillion, second according to CoinGecko data. In contrast, the total cryptocurrency market cap is $2.43 trillion, with Ethereum occupying 15.9% of the market, worth $389 billion.
Bitcoin’s rise to dominance this year is unusual, as altcoins typically do better than Bitcoin in a bull market. While meme coins made a strong comeback during Bitcoin’s rally to all-time highs earlier this year, the so-called “wealth effect” It has not been appreciated as much by mid-range coins, such as Ethereum and Cardano.
“ETF flows fundamentally alter market dynamics,” he wrote Meltem Demirors, former chief strategy officer at CoinShares, tweeted Wednesday: “BTC gains no longer translate to alts and the longer tail of crypto.”
Bitcoin’s takeover has continued even as the market cap of Tether (USDT) continues to grow, the world’s largest stablecoin and the third-largest cryptocurrency after BTC and ETH. Stablecoins are backed by fiat currencies and are excluded from some measures of Bitcoin dominance due to fundamentally different value models.
The surge continued to pace even after the launch of Ethereum spot ETFs last week, which ironically culminated in a news sell-off event, and net outflows from new investment products since they were launched. This went against the predictions of K33 Search so far, which predicted that ETFs would catalyze ETH’s growth over the next five months.
Despite the poorer performance of the alts, there is reason to believe that they are ready to bounce back very soon.
CryptoQuant CEO Ki Young Ju said Tuesday that whales are “preparing for the next altcoin rally,” as limit buy orders for assets other than BTC and ETH are on the rise.
The executive shared a chart showing how the “cumulative difference between purchase volume and sales volume” has increased in recent months.
“The indicator measures the difference between buy and sell orders over a year,” CryptoQuant told Decrypt. A buy/sell order is a pre-set request to buy or sell a cryptocurrency if it hits a certain price level, which creates resistance and support levels.
“If the trend is up, it means that more people are placing buy orders, showing strong interest in buying,” CryptoQuant said.
By Ryan-Ozawa.
After Monday’s crash, in which BTC fell by several thousand dollars, the scenario has repeated itself once again in the last 12 hours, with the asset falling to a 2-week low of $63,300.
Alt coins followed suit, with most of the market in the red today. SOL and XRP lead the way from the higher cap alts.
BTC Drops To $63.3K
After a violent Thursday last week, when BTC crashed to $63,400, the asset went on the offensive over the weekend and surged above $69,000 on Saturday, as the community prepared for Donald Trump’s appearance at the 2024 Bitcoin Conference in Nashville.
His speech was followed by more volatility before the cryptocurrency settled around $67,500 on Sunday. Monday started off rather optimistically for the bulls as bitcoin hit a 7-week high of $70,000.
However, he failed to maintain his run and conquer that level decisively. On the contrary, he was rejected bad and dropped to $66,400 by the end of Monday. Tuesday and Wednesday were less eventful as BTC remained still around $66,500.
The last 12 hours or so have brought another crash. Bears have pushed the leading digital asset down hard, which has fallen to a 2-week low of $63,300 (on Bitstamp), leaving over $200 million in liquidations.
Despite the current rebound to $64,500, BTC’s market cap has fallen to $1.270 trillion, but its dominance over alts is recovering and has reached 52.6%.
Bitcoin/Price/Chart 01.08.2024. Source: TradingView
The Alts are back in red
Ripple’s native token has been at the forefront of the market challenge in recent days as pumped up to a multi-month high of over $0.66. However, its run was also interrupted and XPR fell by more than 6% in the last day to $0.6.
The other big loser among the larger-cap alternatives is SOL, which has lost 8% of its value and is now struggling to get below $170.
The rest of this altcoin cohort is also in the red, with ETH, DOGE, BNB, AVAX, ADA, SHIB, and LINK all seeing drops between 2 and 5%.
The total cryptocurrency market cap lost another $70 billion overnight, falling below $2.4 trillion today on CG.
Cryptocurrency Market Overview. Source: QuantifyCrypto SPECIAL OFFER (sponsored)
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