Decoding Solana's next move

July 05, 2024

Reading time: 5 minutes

$1.54B Bitcoin and Ethereum options are set to expire today

Key points:

  • $1.54 billion worth of Bitcoin and Ethereum options will expire today, potentially causing market volatility.

  • Bitcoin options favor call options, suggesting a bullish bias.

News - The crypto market is anticipating significant volatility today as roughly $1.54 billion worth of Bitcoin and Ethereum options are set to expire.

Expiring options contracts often lead to price fluctuations, and traders are closely monitoring the situation. Bitcoin options with a total value of $1.04 billion are expiring today, with a slight bias towards bullish sentiment as indicated by a put-to-call ratio of 0.71.

The maximum pain point for these contracts sits at $62,000, meaning this is the price level that would cause the most financial loss for option holders.

What about ETH? Ethereum options expiring today have a value of $501.12 million and exhibit a stronger preference for call options, with a put-to-call ratio of 0.37. The maximum pain point for ETH options is $3,350. This comes amidst a recent market sell-off that dragged Bitcoin down to $57,000 and Ethereum to $3,100.

Analysts point to a 10% rise in Bitcoin's short-term implied volatility (IV) and a 3% increase in the Deribit Implied Volatility Index (DVOL), indicating heightened volatility expectations. While expiring options can cause temporary disruptions, historical trends suggest they often lead to market stabilization.

Friend.tech TVL drops $1.1M following decision to stay on Base Network

Key points:

  • Friend.tech experienced a user exodus with over $1 million in crypto leaving its platform daily.

  • The platform reversed its decision to migrate from the Base network.

News - The decentralized social media platform Friend.tech is experiencing a significant user exodus, with over $1 million in crypto assets exiting its smart contracts in less than a day. This trend has persisted for nearly a month, despite the platform's attempts to regain user confidence.

Friend.tech operates on the Base network, a Layer-2 scaling solution for Ethereum. It boasts the second-highest total value locked (TVL) among Ethereum-based L2s, trailing only Arbitrum.

Events unfolding to $1M drop - On 8 June, Friend.tech announced plans to migrate away from Base and develop its own blockchain, Friendchain. However, in a recent reversal, the platform backtracked on its decision. Friend.tech's token supply and liquidity will remain on Base, and the Friendchain migration is on hold.

Following the announcement to stay on Base, Friend.tech's TVL has dropped by a total of $3.3 million, with a particularly sharp decline of over $1.1 million in the last 24 hours.

A declining TVL suggests users are withdrawing their assets, potentially due to a loss of faith in the platform or seeking better opportunities elsewhere. This decline coincides with a 30% drop in the price of Friend.tech's native token, FRIEND, over the past day.

Solana stumbles after ETF hype, analysts divided on short-term outlook

Key points:

  • Solana’s price initially rose on news of a potential ETF but has since retreated.

  • Technical indicators suggest a bearish short-term outlook for SOL.

News - Solana experienced a brief price surge after news of a potential ETF filing by VanEck, but the token has since fallen back down. Analysts are now offering mixed predictions for SOL's immediate future.

Following the initial ETF buzz, SOL's price jumped 10% but has since shed those gains. As of writing, SOL is trading between $132 and $143, down 7.46% in the past 24 hours due to broader market sell-offs.

Technical indicators suggest a bearish short-term outlook for SOL. The token's Relative Strength Index sits at 40.57, indicating weak momentum. An RSI below 50 suggests a potential price decline if the downtrend continues.

However, some analysts remain optimistic about SOL's long-term prospects. Crypto trading firm GSR predicted a potential price target of $1,192 if a Solana ETF is approved by the SEC. Their analysis considered various market scenarios, with the ETF potentially attracting significant investment inflows.

Some setbacks - However, there are also hurdles to consider. A recent paper by Galaxy Research highlights the lack of a futures market for SOL and the SEC's past classification of the token as a security as potential roadblocks to ETF approval.

Adding to the uncertainty is the current selling pressure in the market. Solana's daily chart reveals a negative Cumulative Volume Delta (CVD) of -127.945, indicating that more SOL tokens are being sold than bought.

Mt. Gox begins repayments after a 10-year wait, affects the Bitcoin market

Key points:

  • Mt. Gox, once the leading crypto exchange, begins repaying users after a decade.

  • The exchange collapsed in 2014 following a major hack.

News - Mt. Gox, the once-dominant cryptocurrency exchange that collapsed due to a massive hack in 2014, has finally begun repaying its customers after nearly ten years. This long-awaited development, however, has triggered a wave of selling in the crypto market.

Mt. Gox dominated the early days of Bitcoin, handling over 70% of all transactions. However, a hack in 2014 resulted in the loss of an estimated 740,000 Bitcoin, leading to the exchange's bankruptcy.

What’s more? The news of repayments, announced last month and initiated on 5 July, has instilled fear in the market due to the potential for large-scale selling by Mt. Gox recipients.

While analysts like Willy Chuang, COO of WOO X, believe the market can absorb this selling pressure over time, the immediate impact has been significant.

Bitcoin prices plummeted to $54,000 earlier today, marking a five-month low. This freefall triggered the liquidation of over $580 million in bullish bets placed by traders.

Crypto Scams Uncovered

  • Investors fell victim to a cryptocurrency project known as "Save the Kids”, which was promoted by influencers and celebrities, claiming to be a charitable initiative aimed at helping children. However, it turned out to be a honeypot scam designed to exploit investors.

  • A cryptocurrency account registered in Wang Yicheng’s name received more than $90 million between January 2021 and November 2022. At least $9.1 million of these funds were linked to pig butchering scams. Victims of these scams, such as a 71-year-old California man, fell prey to fraudulent schemes promising high returns.

  • Pincoin and iFan were two interconnected cryptocurrency projects that operated as a Ponzi scheme in Vietnam. Investors were promised high returns through a lending program and referral bonuses. However, after collecting millions of dollars from investors, the operators disappeared, leaving behind empty offices and defrauded investors.

Top 3 coins of the day

Binance Coin (BNB)

Key points:

  • At press time, BNB was trading at $483 with sell pressure in the fore.

  • The coin was down 16.21% over the last seven days.

What you should know - BNB's impressive run in early 2024 peaked in March at $645. It then entered a consolidation phase, trading sideways between $507 and $646. June brought a surge in demand, briefly propelling the price to a new high of $721. However, this momentum fizzled out quickly. July witnessed a significant reversal, with BNB dropping to $454 due to strong sell pressure. At press time, the oversold reading on the RSI (23) suggested the recent sell-off might be nearing exhaustion. This, coupled with the attractive entry point BNB presents, hints at a potential trend reversal. Bulls may be ready to step in and drive the price back up.

Dogecoin (DOGE)

Key points:

  • DOGE was oversold at press time, signifying high sell pressure.

  • Investors could be in for a quick gain in DOGE’s value within the next few days.

What you should know - Similar to BNB, Dogecoin (DOGE) is flashing oversold signals on the RSI, currently at 25. This suggests a potential trend reversal. If bulls regain control, DOGE could climb towards its immediate resistance at $0.12547. A decisive break above this level could see further gains to $0.14593. However, continued bearish pressure could push DOGE down to $0.08455. It's important to remember that DOGE's momentum is often heavily influenced by Bitcoin's price movements. A strong Bitcoin rally would significantly improve DOGE's bullish case.

Uniswap (UNI)

Key points:

  • UNI was trading at $7.36, at the time of writing.

  • It was down 21.80% over the last seven days.

What you should know - Uniswap (UNI) experienced a significant decline of 21.86% over the past week, positioning its support between $6.67 and $5.70, while facing resistance in the range of $11.04 to $12.10. Currently, the MACD and the signal line are both below the neutral line, moving nearly parallel. Thus, indicating a lack of strong momentum in either direction. This suggests a period of consolidation or uncertainty for UNI in the near term. Traders should monitor whether UNI can hold above the support zone for potential signs of recovery, while resistance levels will be crucial for any upward movement.

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