Daily Crypto Signals: Ethereum Retreats from Record Highs, Solana Struggles Above $200
Ethereum pulled back sharply after hitting new all-time highs near $4,946, dragging down blue-chip NFT collections by double digits, while
Quick overview
- Ethereum experienced a sharp pullback after reaching an all-time high of $4,946, impacting blue-chip NFT collections significantly.
- Solana struggles to maintain momentum above $200, with declining on-chain activity and mixed signals in the derivatives market.
- Gemini surpassed Coinbase in U.S. App Store rankings after launching a credit card offering rewards in XRP, highlighting competitive shifts in the crypto space.
- Institutional interest remains strong, as evidenced by significant stablecoin inflows and large withdrawals of ETH from exchanges.
Ethereum ETH/USD pulled back sharply after hitting new all-time highs near $4,946, dragging down blue-chip NFT collections by double digits, while Solana SOL/USD faces resistance at $200 despite institutional backing efforts. The crypto market shows mixed signals with strong stablecoin inflows offsetting concerns about excessive leverage and weakening on-chain activity.
Crypto Market Developments
The crypto market experienced significant volatility this week because major assets were acting in different ways. After 1789 Capital made a strategic investment in Polymarket, Donald Trump Jr. joined the company’s advisory board. This showed that the prediction market is trying to get back into the U.S. market after facing regulatory problems. In July, Polymarket bought the CFTC-licensed derivatives exchange QCEX for $112 million, setting itself up for a regulated comeback.
Gemini made news by passing Coinbase in the U.S. App Store rankings after releasing a credit card that gives users up to 4% back in XRP. This was a big deal because Coinbase had a much more trade volume. Sensor Tower data showed that Gemini rose to 16th rank in finance categories, while Coinbase fell to 20th place.
As the market mood changed, blue-chip NFT collections saw big drops. Pudgy Penguins, one of the most popular collections, plunged 17.3% to a floor price of 10.32 ETH, while Bored Ape Yacht Club slid 14.7% to 9.59 ETH. As digital asset values fell from recent highs, the larger NFT market correction showed that people were worried about sustainability.
Ethereum Faces Resistance at $4,700 After Dipping From ATH
Ethereum had a busy week, hitting a new all-time high of $4,946 on Monday before dropping 12% to $4,342 on Tuesday. The downturn showed the “Monday Trap” pattern, where leveraged long holdings have to sell off quickly at the start of each week. Historical data shows that Monday had the most long liquidations into 2024.
Even if things are changing quickly, the fundamentals imply that institutions will keep being interested. This month, Binance saw more than $1.65 billion in stablecoin deposits, which is the second time this month that deposits have gone over $1.5 billion. Also, over the weekend, around 208,000 ETH worth almost $1 billion were taken out of exchanges. This shows that investors are shifting their holdings to cold storage, which lowers the urge to sell.
However, the data on derivatives shows that leverage levels are worrying. Binance’s Estimated Leverage Ratio (ELR) on ETH hit a record high of 0.53, which is a huge jump from the 0.09 level recorded in mid-2020. With ETH open interest reaching an all-time high of $70 billion, these extreme holdings could lead to big deleveraging events that could kick out traders who are over leveraged.
The technical picture is still quite important around the $4,700 mark. If ETH can get back over $4,700 and hold there as support, bulls will be able to take back control. This would close the current bearish fair value gap between $4,600 and $4,450. A clear daily close above this level might bring back positive momentum and open the way to $5,000. On the other hand, if ETH doesn’t retake it, it will stay in a clear range with the possibility of deeper corrections.
Solana Struggles with $200 Resistance
Over the past six weeks, Solana has had trouble staying above $200, which makes many wonder what is keeping it from going higher. When you compare it to competitors like Ethereum and BNB, which recently hit new all-time highs, this underperformance becomes even more obvious. This shows how weak Solana is in the present market cycle.
On-chain indicators don’t give a clear picture of Solana’s short-term future. Compared to the week before, network fees went down 17% and the number of transactions went down 10%. This is not good news for BNB Chain, whose costs went up 6%, or Ethereum’s layer-2 solutions, where Base transactions went up 14% and Arbitrum transactions went up 20%. More worrying is that Solana’s chain revenue has dropped 91% from its peak in January, which was when the memecoin craze that first propelled network activity started to fade.
Traders are being careful in the derivatives markets. The 10% annualized premium on SOL perpetual futures shows that demand is balanced rather than bullish. After reaching monthly highs, Binance’s top-trader long-to-short ratio has moved toward negative stance. This means that whales and market makers are still not sure if SOL can break above $200 for good.
Even though Galaxy Digital, Multicoin Capital, and Jump Crypto are all trying to raise $1 billion for a digital asset treasury company that focuses on Solana, the market hasn’t reacted much. Three things will determine the path to $250: more activity on the blockchain, more demand for bullish leverage, and the SEC’s decision on Solana spot ETF applications. Eric Balchunas, an analyst at Bloomberg, thinks that the chances of approval are above 90%. The ultimate deadline is in mid-October, so regulatory clarity is very important for any rise to last.
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