Solana Down, Floki, Bonk Crashing: What Is Going On With Altcoins?

Falling Bitcoin prices have prompted a dump in the altcoin market, but that is not the only reason behind their poor performance, according to a new 10x Research report.

The report highlights several key reasons behind the crash.

Ethereum ETF Approval Triggers Altcoin Dump

On May 23, the SEC approved exchanges’ 19b-4 forms to list Ethereum ETFs, which led futures traders to anticipate the listing date.

By June 3, speculative positioning around Ethereum had reached an extreme, risking a potential unwinding.

The author Markus Thielen noted, "Although ETH declined, futures positioning is still excessive – more altcoin unwinding is in the cards."

Token Unlocks

Last week marked a pivotal moment for cryptocurrencies, particularly altcoins.

Massive token unlocks, including Aptos APT/USD ($97 million), IMX ($51 million), STRK ($75 million) and others, totaled $483 million.

Early investors and VCs appear pressured to liquidate, dragging down Bitcoin as well.

Bitcoin And Ethereum Under Pressure

Bitcoin miners have started selling off their inventories, while Ethereum ETH/USD balances on exchanges increased by $2.5 billion, suggesting potential selling pressure.

Despite positive inflation data, Bitcoin ETFs saw significant outflows, averaging $660 million over five days.

Net outflows across various segments reached $2.4 billion, marking only the third weekly decline since the ETFs’ January 2024 launch.

Also Read: ‘Trump Coin’ DJT Allegedly Tied To Donald Trump Causes Havoc, Other Trump Meme Coins Plummet 30%

Solana’s Impact And Future Outlook

Solana SOL/USD was a key driver of the altcoin rally in late 2023 but is now facing critical trend level breaks.

Mid-last week, 10x Research’s trading signals indicated a sell for Solana and Bitcoin, with SOL potentially dropping to $100.

Solana underwent significant upgrades in late 2023, including new network features and confidential transfers using zero-knowledge proofs.

Despite increased DApp usage and NFT volumes, Solana’s TVL has seen double-digit declines recently.

Market Sentiment And Investor Reaction

The highly anticipated ZKsync airdrop plummeted 38% immediately after its release, causing shockwaves in the market.

Ethena's tokenomics update also disappointed, with ENA down 19% and SEI down 15% due to major unlocks.

Thielen said, "The altcoin market cap peaked at $927 billion in November 2021 but has seen drastic changes since then."

He noted that altcoin dominance has declined from 30% in December 2022 to 17% currently, highlighting the market’s volatility.

Meme Coins And Market Dynamics

The meme coin rally in early 2024, driven by projects like Floki FLOKI/USD and BONK BONK/USD, seems to have lost momentum.

Weekly network fees on Solana, which peaked in March 2024, indicate reduced speculative activity.

Thielen suggests, "We would not buy the dip in those coins, despite expectations that Bitcoin can still make a new all-time high later in the year."

Looking Ahead: Benzinga’s Future Of Digital Assets Event

For a deeper dive into the evolving landscape of digital assets, Benzinga’s Future of Digital Assets event on Nov. 19 will offer critical insights.

The event will explore regulatory impacts, investment strategies, and market trends, providing valuable information for navigating the complex world of digital finance.

Read Next: Dogecoin’s 10% Dump Liquidates $60M In Long Bets

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Shutterstock