Decentral Block Post

Solana (SOL) is on the track to log its worst daily performance on record.

On Nov. 9, SOL’s price dropped more than 40% to around $16 primarily due to its association with Sam Bankman-Fried, the founder of crypto-focused hedge fund Alameda Research and cryptocurrency exchange FTX.

Sam tokens get ‘fried’

Fried was an early investor in the Solana blockchain project via Alameda Research. On Nov. 8, the entrepreneur’s estimated wealth plunged from a whopping $15.6 billion to around $1 billion, according to Bloomberg Billionaires Index.

At the core of this wipeout was a near-collapse of FTX. On Nov. 6, Binance, FTX’s rival exchange and early investor, decided to sell its $2 billion stake, which it was holding in the form of FTX’s native token, FTX Token (FTT). In response, FTT’s price crashed by over 85% and was trading for around $3.60 as of Nov. 9.

Alameda Research’s balance sheet reportedly was worth around $12 billion as of June 30, out of which half was FTT. The firm allegedly had $8 billion in liabilities on the same day, raising speculation about its potential insolvency after FTT’s massive crash.

Bitcoin (BTC) liquidated $200 million of long positions on Nov. 8 as BTC price briefly tumbled to two-year lows.

BTC price sets new two-year low

Data from Cointelegraph Markets Pro and TradingView revealed carnage across crypto price charts as exchange FTX kept the mood low.

After initially rebounding over $20,000 on news that the embattled FTX might be bought out by competitor Binance, panic returned after the Wall Street open.

BTC/USD lost $2,000 in under two hours, seeing a sudden plunge that set a low of $17,120 on Bitstamp.

The last time the pair traded at that level was in late November 2020, meaning Bitcoin managed to beat the previous macro lows of $17,600 set in June this year.

After topping the $21,500 mark on Nov. 4, Bitcoin (BTC) price is down by 14% on Nov. 8, reaching a new yearly low at $17,166 and most altcoins are following suit. 

While the Binance and FTX news initially caused an uptick in the market, the day turned south as various unconfirmed sources speculate that FTX’s losses could show a $6 billion deficit.

This price decline breaks Bitcoin’s short-term correlation to the stock market, with the tech-heavy Nasdaq down only 0.32%, while the Dow Jones gained 0.48% on the back of investors’ optimism about the Nov. 8 U.S. Midterm elections.

In the backdrop of the current volatility, $614 million in BTC longs are at risk of liquidation with over $224 million liquidated on Nov. 8. The fear for many is if the FTX situation is not resolved by Binance’s bid to purchase the exchange, a sharper sell-off in the market could trigger a liquidation cascade and send BTC price to new lows.

Let’s investigate the main reasons why the Bitcoin price is down today.

FTX Token (FTT) and Solana’s SOL (SOL) endured a tough weekend of trading that saw altcoins take double-digit losses in the 15%–30% range, but the tide turned as news broke that Binance could be in the process of acquiring FTX.

On Nov. 8, FTX CEO Sam Bankman-Fried first took to Twitter to announce a liquidity-sharing partnership with Binance. Changpeng “CZ” Zhao, CEO of Binance, agreed to step in and provide liquidity to what was beginning to look like a bank run. Bankman-Fried billed the development as user-focused and benefiting the entire industry.

CZ also confirmed that Binance would step in to assist FTX with its liquidity crunch, with the CEO tweeting a letter of intent to purchase FTX.

Since Nov. 7, FTX has been experiencing liquidity issues after news broke surrounding Alameda Research’s odd-looking books. As FTX was fighting off withdrawals from their exchange, even freezing withdrawals at one point, Binance announced it would sell the entire FTT allocation it possessed.

During the disagreement between exchanges, FTT price dropped 38.7% from $25.71 to $15.76, and SOL price fell 31.23% to a five-month low at $25. After news of a potential agreement between FTX and Binance, FTT price bounced more than 20%, but it still trades well below what had been long-time support at $22.

Bitcoin (BTC) saw major volatility after the Nov. 8 Wall Street open as turmoil over crypto exchange FTX punished markets further.

Binance hints at plan to buy FTX

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $19,244 on Bitstamp, marking the pair’s lowest levels in two weeks and 24-hour losses of nearly 7%.

FTX remained the main topic in the industry, despite the United States midterm elections getting underway and Nov. 10 due to deliver fresh inflation data.

“Event of the week was supposed to be US CPI on Thursday, not two billionaires with acronyms for names nuking the market,” popular commentator Tedtalksmacro summarized.

Worries over solvency at FTX were not helped by a lengthy silence from the exchange’s executives as withdrawals stopped on the day.

Chainlink (LINK) returned to mimic the broader crypto market downtrend as its price fell alongside top coins Bitcoin (BTC) and Ether (ETH) on Nov. 8. 

LINK plunged by as much as 10% into the day to reach $8. While BTC and ETH slipped by approximately 6.5% and 9%. That contrasts with the trend witnessed on Nov. 7, wherein LINK rallied 14% to $9.25, its three-month high, while BTC and ETH dropped 1.5% and 0.5%, respectively.

Overall, on a week-to-date timeframe, Chainlink has outperformed both Bitcoin and Ethereum. 

What's making Chainlink stronger

LINK's price has rebounded by nearly 75% after bottoming out at $5.29 in May. Notably, the Chainlink token's recovery rally has coincided with a persistent increase in the supply held by its whales (entities that hold at least 1,000 LINK).

The Chainlink supply percentage held by addresses with a balance between 1,000 LINK and 1 million LINK has risen to nearly 23% in November from 18.2% in May, according to Santiment data. This indicates that rich investors may have been the key players behind the LINK price recovery.

Bitcoin (BTC) and crypto markets fell heavily into Nov. 8 as contagion from the FTX debacle spilled over.

Analysts dismiss FTX insolvency fears

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD falling to $19,351 on Bitstamp — its lowest levels since Oct. 25.

The pair, along with altcoins large and small, had already begun to show weakness as moves by Binance to cancel exposure to FTX’s in-house FXT Token (FTT) token were confirmed by CEO Changpeng Zhao.

In a Twitter thread later on Nov. 7, Zhao defended the decision, while FTX CEO Sam Bankman-Fried attempted to reassure markets that his trading platform was solvent.

“There were questions about a large ($580m) FTT deposit to Binance, and we were transparent about the fact that we are closing our FTT position,” part of one of Zhao’s tweets read.

147 days have passed since Bitcoin (BTC) closed above $25,000, and the result is that investors are less sure that the $20,000 support will hold. Backing these concerns are persistent global financial and macroeconomic tensions, which escalated on Nov. 7 after European Union officials expressed concerns over the $369 billion U.S. Inflation Reduction Act.

The extended tax, health and climate bill was approved in August and it also includes subsidies for electric cars and battery supply chains that are made in North America.

According to CNBC, this is not the first time that Europe has expressed its concerns, citing international trade rules and "discriminatory" policies.

There's additional uncertainty coming from the Nov. 8, U.S. midterm elections which will determine which party controls Congress. Currently, Democrats have a majority in the Lower House, but a change in this status could ease President Biden's future spending plans.

In other news, Apple announced a temporary reduction in iPhone 14 production due to Covid-19 restrictions in China. To put things in perspective, Apple's $2.2 trillion market capitalization has surpassed the sum of Alphabet (Google) and Amazon.

Bitcoin (BTC) stayed lower at the Nov. 7 Wall Street open as the day before the United States midterm elections opened to flat equities performance.

Crypto wobbles on FTX woes

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD nearing $20,600 at the time of writing — a three-day low.

Volatility was expected around the midterms and the Consumer Price Index (CPI) print for October later in the week.

An additional hurdle in the form of controversy over trading platform FTX added to the market’s cold feet, with commentators wary of unnecessary damage to growth.

“This whole thing is incredibly bad for the industry, and especially for retail,” popular trader and analyst Pentoshi summarized.

A recent price rally in the Solana (SOL) market ran out of steam midway as traders’ attention shifted to crypto-focused hedge fund Alameda Research’s insolvency rumors.

Alameda Research insolvency rumors affect SOL 

On Nov. 7, SOL’s price plunged nearly 6% to about $30.50. The intraday selloff came as a part of a broader pullback trend that started on Nov. 5 when SOL peaked at around $38.75. Between then and now, the Solana token is down over 20%.

The beginning of SOL’s plunge coincided with reports that Alameda Research has liabilities worth $8 billion but may not have liquid assets on its balance sheet to meet those obligations.

Interestingly, the value of all those assets plunged synchronously in the past 48 hours — including SOL, as well as FTX Token (FTT), Serum (SRM) and Oxygen (OXY) — on fears of cascading liquidation if Alameda Research becomes insolvent.

Google partnership, NFT growth

Nevertheless, traders showed interest in holding SOL’s price above $30, a technical support level, on Nov. 7. One reason could be a flurry of optimistic news that emerged over the weekend, including the launch of smartphones, DApp stores, and a Google Cloud partnership.

An ongoing selloff in the FTX Token (FTT) market could worsen in the coming months owing to a mix of pessimistic technical and fundamental indicators.

FTT could plunge 30%

From a technical perspective, FTT has formed an inverse-cup-and-handle pattern on the daily chart, identifiable by its crescent-shaped price trend followed by a less extreme upward retracement.

On Nov. 6, FTT broke below the pattern's support line near $22.50, accompanied by a volume spike. The FTX exchange token's selloff continued on Nov. 7 below the support line, raising risks of a bearish continuation phase in the coming months.

As a rule of technical analysis, the inverse-cup-and-handle breakdown can push the price down by the length equal to the distance between the pattern's support and peak level. That puts FTT's breakdown price target at around $16, down roughly 30% from the current price.

The bearish technical setup came as Changpeng Zhao (CZ), the CEO of crypto exchange Binance, said his company would liquidate its entire FTT holdings in the coming months, on fears that the token might collapse in the same manner as Terra (LUNA) in May 2021.

Bitcoin (BTC) starts the second week of November battling some familiar FUD — how will BTC price action react?

The largest cryptocurrency managed a weekly close just below $21,000 on Nov. 6 — an impressive multi-week high — but remains fixed in a sticky trading range.

Despite seeing highs of nearly $21,500 over the past week, there has yet to be a catalyst capable of breaking the market status quo, but the coming week has as good a chance as any of doing so.

Nov. 10 will see key United States inflation data for October released, while jobless claims and multiple speeches from Federal Reserve officials may also impact risk asset volatility.

An unexpected twist from within the crypto realm comes in the form of turmoil involving exchange FTX, Alameda Research and Binance.

Bitcoin (BTC) holders looking to avoid Central Bank Digital Currencies (CBDCs) may have gained a surprise ally — banks.

In his latest blog post, “Pure Evil,” Arthur Hayes, ex-CEO of crypto derivatives platform BitMEX, argued that banks may limit the impact of the CBDC “horror story.”

Hayes: Bitcoiners and banks stand against CBDC "dystopia"

CBDCs are currently in various stages of development worldwide.

Fans of financial sovereignty naturally fear and even despise them, as they imply total government control over everyone’s money and purchasing power — “a full-frontal assault on our ability to have sovereignty over honest transactions between ourselves,” says Hayes.

Among opponents of CBDCs are not only Bitcoiners, however. Sharing the cause will likely be the commercial banks they have sought to oust from power with BTC.

Solana (SOL) has been in a steady downtrend for the past 3 months, but some traders believe that it may have bottomed at $26.80 on Oct. 21. Lately, there's been a lot of speculation on the causes for the underperformance and some analysts are pointing to competition from Aptos Network.

The Aptos blockchain launched on Oct. 17 and it claims to handle three times more transactions per second than Solana. Yet, after four years of development and millions of dollars in funding, the debut of the layer-1 smart contract solution was rather unimpressive.

It is essential to highlight that Solana presently holds an $11.5 billion market capitalization at the $32 nominal price level, ranking it as the seventh largest cryptocurrency when excluding stablecoins. Despite its size, SOL’s year-to-date performance reflects a lackluster 82% drop, while the broader global market capitalization is down 56%.

Unfortunate events have negatively impacted SOL’s price

The downtrend accelerated on Oct. 11 after a leading decentralized finance application on the Solana Network suffered a $116 million hack.

Mango Markets’ oracle was attacked due to the low liquidity on the platform's native Mango (MNGO) token which is used for collateral. To put things in perspective, the hack represented 9% of Solana's total value locked (TVL) in smart contracts.

Bitcoin (BTC) held gains above $21,000 into Nov. 5 as the U.S. dollar posted a rare major daily decline.

Dollar dives 2% as risk assets recover

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD building on prior strength to hit highs of $21,473 on Bitstamp — a new seven-week high.

The pair had benefited from the latest United States economic data, while the dollar conversely suffered. The U.S. dollar index (DXY) lost 2% in a day for the first time in years, helping fuel a risk asset rally.

“And, just like that, Bitcoin took out all the highs, volume is increasing and it's back above $21K,” Michaël van de Poppe, CEO and founder of trading firm Eight, commented.

“I'm assuming we'll continue towards $22.5K from here, but have a slight correction before continuing (as we took out all the liquidity). Buy the dip season.”

Since March 2022, traders and so-called analysts have been forecasting a policy change or pivot from the United States Federal Reserve. 

Apparently, such a move would prove that the Fed’s only available option is to print into oblivion, further diminishing the value of the dollar and enshrining Bitcoin (BTC) as the world’s future reserve asset and ultimate store of value.

Apparently.

Well, this week (Nov. 2) theFed raised interest rates by the expected 0.75%, and equities and crypto rallied like they usually do.

But this time, there was a twist. Prior to the FOMC gathering, there were a few unconfirmed leaks that the Fed and White House were considering a “policy pivot.”

In the past year, Polygon (MATIC) has focused on growing their list of high-profile partners which includes luminaries like Disney, Starbucks and Robinhood. The recent announcements of partnerships with both Instagram and JPMorgan have speculators pushing the token price up nearly 200%. 

In addition to partnerships, blockchain adoption through network usage is important to analyze. Blockchain adoption can be analyzed by looking into daily active users of the blockchain, protocols using the technology, number of transactions and total locked value.

Total value locked on Polygon rises above $1B

Total value locked (TVL) is one cryptocurrency indicator used to assess the market’s sentiment towards a particular blockchain. TVL on Polygon requires utilizing the MATIC blockchain and locking funds in the various DeFi platforms available across the network.

Rising TVL is a sign of growth, or new liquidity entering the ecosystem but it does not necessarily mean that the network and associated assets are “turning bullish.”

While the top 3 protocols, Ethereum (ETH), Binance Coin (BNB) and Tron (TRX) all have a TVL over $5 billion, MATIC, Avalanche (AVAX) and Arbitrum are the only others with over $1 billion in TVL.