After rising to the $23k level and peaking at $24.6k last week, Bitcoin’s price has been testing support as the global cryptocurrency market continued to trade sideways. With the Solana news breaking yesterday, Bitcoin’s price slid to the $22.8k level again, erasing last week’s gains. Understandably, Bitcoin is seeing bearish momentum, as the Solana hack is one of the most significant DeFi blunders of the year.
Key Points:
The global cryptocurrency market cap is down 1.42% in the past 24 hours, with the bearish correction attributed to the Solana network attack, causing losses of over $500 million across more than 8k hacked wallets.
Surprisingly, Solana is only down 3.67% in the past 24 hours, a relatively minor correction given the scale of the network attack. This weekend, we will continue seeing downward market pressure for Solana and other major digital assets like Bitcoin and Ethereum.
While the price correction for most digital assets today is minor, the bigger worry is the large decline in trading volume. Bitcoin’s 24-hour trading volume is down 13%, and Ethereum’s is down 23.38%. The sharp decline in trading volume in a sideways market is an unclear indicator.
Usually, a decline in volume during a downtrend is a bullish sign, while a rapid decrease in volume during an uptrend is a bearish sign.
Moreover, Solana’s trading volume is down over 31%, as the cryptocurrency dipped below the $40 range, currently trading at $38.59. Since Solana is in a downtrend, the decline in trading volume could be a bullish sign that the digital asset might recover next week.
The good news regarding the Solana network attack is that there is no evidence the Solana protocol or its cryptography was compromised, according to a Tweet posted by @SolanaStatus, one of the official Solana Twitter accounts.
In other news, according to a report from Bloomberg, the Federal Reserve is unlikely to halt its efforts to combat inflation and stop rate hikes anytime soon.
While the Chair of the Federal Reserve, Jerome Powell, said in a July 27th press conference that the Fed would likely “slow the pace of increases” regarding rate hikes, Fed district-bank presidents clarified that there was no end in sight for inflation just yet. The Federal Reserve will likely continue rate hikes until inflation is down around the 2% target.
We’ll likely continue to see tight monetary policy coming from the Federal Reserve for several more months before any substantial slack is given to the economy.
The good news is that stocks remain relatively healthy, with the NASDAQ up 3.11% in the past five days and up 0.83% in the past days. Moreover, Dow Jones is up 1.91% in the past week, signaling a healthy market for next week.
Since Bitcoin’s price closely follows the stock market price action, BTC will likely continue to trade sideways within its current range.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any stocks.
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