$SOL Down 19% As Market Collapses: Was That The Top?

Fearful market participants claim the bull run is over as prices across the industry tank.

Published: Dec 20, 2024 at 15:43
Edited: Dec 20, 2024 at 15:43

Mere weeks ago, the crypto markets had never looked better. Bitcoin finally cracked $100,000, Solana broke previous all-time highs, and a pro-crypto White House looked primed to send markets to the stratosphere.

As proven over the years, crypto markets have a habit of humbling euphoric traders. With Bitcoin dipping back below $100,000 and altcoins tanking across the board, crypto enthusiasts are now concerned that we may have witnessed the top of this cycle.

Is this the beginning of a new crypto winter?

What Initiated Crypto Market Sell-Off?

Bitcoin was looking solid over $100,000 earlier this week, giving traders confidence that capital would soon rotate into strong altcoins. Spurred on by the expectation of euphoric gains, crypto traders eagerly piled on leverage ahead of what popular consensus believes to be a bullish Q1.

However, on December 18, Federal Reserve Chair Jerome Powell delivered the hammer stroke that caused the first domino to fall.

During this week’s FOMC meeting, Powell declared the U.S. Central Bank was “not allowed to own Bitcoin”, countering President-elect Donald Trump’s promise to create a Strategic Bitcoin Reserve.

Powell’s position inflicted a sharp drop in Bitcoin price, sending the world’s largest cryptocurrency back underneath the $100,000 mark. Fear crept back into crypto markets, leading to cascading liquidations across the industry.

Altcoins like Solana have been hit particularly hard. Over the last seven days, $SOL has dropped 19.42% to $181.24, currently down 31.30% from the new all-time highs recorded on November 23rd.

Solana Witnesses $413M in 24-Hour Liquidations

Volatile market conditions have consistently humbled traders in Q4. On November 26, Solana onchain liquidations reached as high as $190M in a 24-hour period, effectively cleaning the slate.

However, it appears markets weren’t finished punishing over-leveraged traders. Further liquidations have sent Bitcoin spiraling as low as $92,990, washing out positions across the industry.

ranger finance

According to Ranger Finance data, Solana has witnessed over $502M in liquidations, with long positions constituting over 97% of all lost positions.

coinglass

Meanwhile, Coinglass reports that centralized exchanges collectively processed over $1.38B in liquidations. This suggests that Solana handles more liquidation volume than most of the industry’s centralized exchanges, witnessing around 36% of combined CEX liquidations.

Necessary Pull-Back or Cycle Top?

Significant retracements across markets have led to many crypto enthusiasts speculating on where we are in the current bull cycle. Social media commentators are tentatively suggesting that mainstream media coverage of memecoins is a telltale indicator.

Others remain optimistic that the crypto bull run still has plenty of juice left in the tank. Claiming this week’s flush is nothing more than a brutal shakeout, there is still widespread belief that the markets will remain bullish in 2025.

Looking ahead, there are still sufficiently bullish catalysts on the horizon that would suggest this cycle hasn’t topped out just yet. The Trump Administration is still expected to usher in greater regulatory clarity for crypto assets, which may streamline Solana ETF approvals. Additionally, markets now enjoy institutional support from Bitcoin and Ethereum ETFs, with the world’s biggest asset managers accumulating crypto assets.

Last cycle, Bitcoin peaked 355 days after breaking its previous all-time high. This time round, Bitcoin broke its 2021 highs in March 2024, suggesting this cycle might still have some room left to run.