Solana holders in shock

September 04, 2024

Reading time: 5 minutes

Bitcoin's illiquidity hits a record high, signaling a potential bullish run

Key points:

  • Nearly three-quarters of the total circulating supply is now held by illiquid entities.

  • The Bitcoin Halving event is a major factor contributing to the increasing illiquidity.

News - Bitcoin's supply is becoming increasingly scarce, with nearly three-quarters of the cryptocurrency now held by illiquid entities. This record-high illiquidity could lead to a significant price increase as demand outpaces supply.

Data from ETC Group and Glassnode reveals that illiquid entities currently own over 14.6 million BTC, representing 74% of the total circulating supply. This marks a substantial increase from previous levels and suggests a growing concentration of Bitcoin holdings among entities that are less likely to sell their coins.

BTC halving event played a key role - André Dragosch, head of research at ETC Group, believes that the increasing illiquidity is a direct result of the Bitcoin Halving event, which reduced the rate at which new coins are created. This supply shock is expected to provide a strong tailwind for Bitcoin and other cryptocurrencies in the coming months.

As the scarcity of Bitcoin increases, even a moderate rise in demand could have a disproportionate impact on its price. This could potentially lead to a renewed bullish run, similar to the one that pushed prices to all-time highs earlier this year.

Japan could lower taxes on Bitcoin and other cryptocurrencies

Key points:

  • Japan is considering treating crypto holdings as financial assets.

  • This could lead to lower tax rates for high-earning crypto investors.

News - Japan's Financial Services Agency is considering a significant change in the tax treatment of crypto assets. The agency has suggested that crypto holdings should be treated as financial assets rather than income, potentially leading to lower tax rates for high-earning crypto investors.

Currently, crypto profits in Japan are taxed as income, which can reach as high as 45% for individuals earning over 40 million yen. In contrast, capital gains from securities sales are subject to a flat rate of 20%. A shift to treating crypto assets as financial assets would align their tax treatment with traditional investments.

What’s more? The agency believes that lowering the tax rate for crypto holdings could encourage more individual investors to adopt cryptocurrencies. This could contribute to economic growth by expanding wages and creating new household assets.

Japan's review of crypto tax policies comes in response to a perceived exodus of crypto companies from the country due to the high tax rates. Last year, the government announced that Japanese crypto issuers would not be subject to taxes on unrealized gains.

Pump.fun sell-off triggers double-digit decline for Solana

Key points:

  • Solana price drops over 12% due to Pump.fun selling and memecoin craze.

  • The coin’s price movement is closely linked to Bitcoin's performance.

News - Solana’s price has witnessed a significant decline over the past week, falling more than 12% to trade at $128.

This slump comes as memecoin launch platform Pump.fun continues to sell its large holdings of SOL tokens. The platform has offloaded a total of $41.64 million worth of SOL, potentially impacting the market sentiment around the cryptocurrency.

Role of pump.fun - Analysts believe the recent surge in memecoin launches on Solana might be putting downward pressure on the token's price. The initial bullish momentum for SOL seems to have stalled as users flooded the network with meme tokens using Pump.fun. This trend could be diverting attention away from the core functionalities of the Solana ecosystem.

Furthermore, Solana's price movement remains closely tied to Bitcoin's performance. Over the last quarter, Bitcoin's price has dipped nearly 18%, dragging Solana down by almost 22%.

Meanwhile, some experts predict a US Solana ETF approval as early as the end of 2024, citing the ongoing election season and the potential shift in regulatory stance.

South Korean regulator targets money laundering in crypto market

Key points:

  • South Korea's FSS is intensifying scrutiny of crypto exchanges.

  • The regulator will conduct inspections to identify suspicious activities and ensure compliance.

News - South Korea's financial watchdog, the Financial Supervisory Service (FSS), is ramping up its oversight of virtual asset exchanges.

The regulator plans to conduct thorough inspections to identify any suspicious or illegal activities and ensure compliance with existing regulations.

The FSS will employ stringent penalties for non-compliant exchanges and advocate for regulatory revisions if necessary. The inspections will focus on scrutinizing transactions and verifying adherence to the Virtual Asset User Protection Act, which came into effect in July.

More details - The act mandates several measures to safeguard cryptocurrency investors, including insurance against hacks and the separation of customer assets from exchange funds.

Similar to South Korea, other jurisdictions worldwide are increasing their oversight of digital asset trading platforms. Hong Kong has made operating an unlicensed virtual asset trading platform a criminal offense, and the UK's financial regulator has fined Coinbase for breaching user onboarding regulations.

Interesting facts

  • Satoshi Nakamoto never used the term ‘cryptocurrency’ in his Bitcoin white paper. In fact, he called the blockchain a ‘timestamp server.’

  • The popular slang term - HODL - owes its creation to a typo when a harried crypto-holder responded to online criticism with ‘I AM HODLING’

  • According to CoinGecko, over 14,000 of the 24,000 cryptos listed since 2014 have ‘died’ owing to reasons such as desertion, lack of node development, frauds, minimal traction, et al.

Top 3 coins of the day

Ethereum (ETH)

Key points:

  • ETH hit its lowest mark in over a month.

  • The market was overwhelmed with fear of a further fall.

What you should know - Ethereum is currently trading at $2,453.99, up 1.18%. The chart shows that ETH is experiencing sideways trading within a support zone between $2,200 and $2,600. A near-term resistance level is observed around $2,800, which ETH needs to break for a bullish trend reversal. The MACD indicator is negative, showing a bearish crossover, which suggests caution as the bearish momentum remains strong. However, ETH is consolidating near the support zone, which could indicate potential accumulation by buyers. To confirm a bullish breakout, ETH must clear the near-term resistance and close above $2,800 with increased volume. On the downside, a break below the $2,200 support could lead to further declines toward $2,000 or lower levels.

Toncoin (TON)

Key points:

  • TON, at press time, was trading at $4.70.

  • Investors might soon witness a trend reversal.

What you should know - Toncoin is currently trading at $4.703, down 3.82%, continuing its sharp decline. The price has dropped by 34.26% from its recent peak around $7.00, indicating a strong bearish trend. The Bollinger Bands are widening, suggesting increasing volatility, while the price remains below the middle band, highlighting sustained selling pressure. The RSI is at 28.45, indicating a potential bounce or short-term recovery. However, the overall trend suggests that sellers are still in control. If the current downtrend continues, TON could retest lower support levels around $4.00. To see a trend reversal, the price needs to break above the $5.85 level, supported by strong buying volume and improved market sentiment.

Uniswap (UNI)

Key points:

  • UNI was up by 16% over the last seven days.

  • Short-term bulls were in control of market movement.

What you should know - Uniswap (UNI) is trading at $6.576, up by 8.80%, showing a strong bullish move. The price has broken above the 20-day EMA and is now approaching the near-term resistance around $7.50. The increasing volume suggests strong buying interest, while the Chaikin Money Flow (CMF) indicator at 0.03 indicates positive money flow into UNI. The recent price action has created a potential for further upside if the price can sustain above the key moving averages (20, 50, 100, and 200 EMAs). A breakout above the $7.50 resistance could target the next significant resistance around $8.50. However, failure to break this level might lead to consolidation or a pullback towards the $6.00 support zone.

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