Markets
Are Ethereum and Solana Threatening Crypto Market Stability?
- The community is pessimistic about Solana and Ethereum, but experts are still very optimistic about SOL.
- Crypto markets are still in correction, with most altcoins currently in the red.
The crypto market is still recovering from a strong case of corrections, and altcoins are faring worse than all.
At press time, almost all altcoins in the top 25 are in the red, having seen a slight decline on the daily charts. Is there a bearish storm on the horizon? Or are we still in a new season?
Solana and Ethereum inspire bearish sentiments
Two major altcoins stood out from the crowd, seemingly dancing with the bears. Both coins fell from critical support levels of $2,995 and $145.
At the time of writing, Ethereum [ETH] was worth $2,968 and Solana [SOL] it was at $141.
Data from CoinGecko says the community is bearish on both tokens at the moment.
Just two days ago, Glassnode shared that Ethereum’s performance is much weaker than Bitcoin [BTC]despite the opposite having happened just a month earlier.
This is a complete reversal from its previous position where it showed dominance over Bitcoin.
Ethereum’s price drop was enormous, with its deepest drawdown reaching 44% over the cycle, which is more than double Bitcoin’s 21%.
This highlights the difficulties and underperformance of Ethereum relative to Bitcoin.
The short-term holder cost basis for Ethereum, which is typically supportive, shows that current prices are hovering very close to the cost basis of recent buyers.
Glassnode warns that this situation has created a precarious scenario where any further market decline could trigger panic selling.
Source: Glassnode
A good side
Despite the bleak outlook, not all hope is lost. Solana, for example, appears to have weathered what could have been its last major correction for this market cycle.
According to a crypto analyst known as Immortalthe only support level Solana needed to defend is $120.
He still expects a recovery, with his projections suggesting a rise to a new high of $320 later this year.
Additionally, there are indicators that Solana could soon overtake Ethereum in terms of transaction fees.
Dan Smith, Senior Research Analyst at Blockworks, suggested that Solana could surpass Ethereum in transaction fees and capture maximum extractable value (MEV) as early as this month.
MEV represents the maximum profit that can be extracted from blockchain transactions through means such as arbitration.
On May 7, Solana’s total economic value was reported at $2.8 million, approaching Ethereum’s $3.1 million. Elite figures like Arthur Hayes are also still highly optimistic about SOL.
Interestingly, however, the community appears to be highly optimistic about the broader altcoin market, especially AI tokens like Search.ai [FET].
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meme coins like Pepê [PEPE] It is Bonk [BONK] we still see new holders every day, suggesting that investors and traders are still expecting a bull run for 2024.
So yes, the bears may have managed to take control. But it’s likely to be temporary.