As of the current moment, Solana stands out among the top cryptocurrencies, leading the market with a remarkable 27% increase in value over the past week. This impressive growth is not a random occurrence. The surge in demand for SOL following the ‘Trump pump’ resulted in an influx of $3 billion in stablecoins into the network, driven primarily by FOMO among investors. The wave of enthusiasm for meme coins led to a significant boost in liquidity. Nevertheless, as the initial excitement begins to wane, what lies ahead for Solana?
Is the Overreliance on Hype Becoming Detrimental?
A day before the introduction of TRUMP, Solana stablecoins held a market cap of $6.10 billion. Fast forward to the present, and this figure has skyrocketed to $9.88 billion, marking a substantial 61% surge in less than three days. Additionally, the inflow of USD reached an all-time high of $1.757 billion – an unprecedented milestone.
With investors eager to ride the meme coin wave, the network began minting stablecoins at a rapid pace to meet the demand. Subsequently, Solana witnessed a spike of 19.53% in a single day, breaking free from a period of stagnation and surpassing its post-election rally peak.
In a matter of just three days, stakeholders were enjoying significant returns on their investments. Undoubtedly, after exercising patience for two months, HODLers were quick to cash in their profits. However, merely two days later, SOL experienced a drop of more than 12% from its gains, with the selling volume surging to a five-month high of $25.07 million.
Beneath the numerical data lies a more profound transformation. Is Solana excessively dependent on the enthusiasm surrounding meme coins, chasing short-term profits rather than focusing on long-term value? While the hype propelled Solana to new heights, the pertinent query now revolves around the potential resurgence of FOMO in the aftermath of the cooling off of the meme coin frenzy.
Commencement of Solana’s True Trial
Mere two days ago, exchanges witnessed a transfer of $384.79 million worth of SOL, valued at $261. Consequently, the Open Interest surged to an all-time high of $8.79 billion.
What ensued was a severe long squeeze that eradicated over $21 million within a span of 24 hours. Contemplate the colossal losses incurred in the last 36 hours. With Futures traders grappling with the repercussions, the comeback of FOMO presents itself as a risky proposition.
Despite the bullish outlook on the psychological front with the MACD remaining favorable for the SOL/BTC pair, hinting at a probable resurgence in retail interest amid Bitcoin entering a ‘high-risk’ phase and increased market volatility.
Nevertheless, in the absence of fresh accumulation, the specter of profit-taking looms large. With more than 80% of HODLers currently realizing profits, Solana is now confronted with its true challenge – Can it maintain its upward trajectory or is it banking on transient trends for a revival?