Key Points
- The sharp decline in large SOL holdings suggests a shift to Bitcoin amidst altcoin volatilty.
- Matrixport highlights the Bitcoin rotation amidst the fading memecoin hype.
In a new report dated February 7, Matrixport reveals that Solana whales are cashing out, suggesting a Bitcoin rotation amidst the fading memecoin hype.
SOL Whales Are Cashing Out
In their report, Matrixport reveals that a notable trend has emerged in the crypto markets with wallets holding at least 10,000 SOL have declined sharply over the past two months.
According to them, this suggests that large investors are selling SOL, likely limiting any rise in its price.
Over the past week, SOL recorded a downward trajectory, being down by over 16%.
SOL 7-day price in USDAccording to Matrixport, early SOL investors who accumulated the coin before the memecoin surge at the end of 2023 are now cashing out and shifting their investments to Bitcoin. They noted that this could explain Bitcoin’s relative stability in prices amidst a significant decline in altcoins.
Currently, BTC is trading above $97,000, following a recent drop to $95,000 levels.
Bitcoin’s Resilience, Explained
Matrixport also highlighted that while many traders are making emotional trading decisions, Bitcoin is consistently reacting rationally to macroeconomic, monetary, and liquidity events.
They noted that following the US elections in November, Bitcoin and altcoins surged, driven by optimism regarding a change in policy for crypto under the new Trump administration that would also establish a Strategic Bitcoin Reserve.
Matrixport also recalled the hawkish tone of the December FOMC meeting which hinted at fewer rate cuts this year, but still, the market sentiment remained strong until Trump’s January 20 inauguration.
However, now Bitcoin remains surrounded by huge optimism stemming from important global moves supporting adoption, and upcoming plans for SBRs. Besides the US, efforts are being made to increase Bitcoin exposure in Europe as well.
In 2024, the market cap of altcoins mirrored Bitcoin’s movements, while BTC dominance has steadily increased. While the altcoin market followed Bitcoin after the US elections, now altcoins are losing value, according to the analytics firm.
Altcoins’ Decline and Pump.fun Slowdown
The decline is driven by fading expectations of a DeFi resurgence and hopes that certain crypto companies like Stellar and Ripple would benefit from relaxed payment regulations for digital assets.
Matrrixport noted that instead of a new DeFi cycle like the one in 2020/2021 bull market, the memecoins and Pump.fun era took over. Meanwhile, Ethereum missed out on the trend due to factors including:
- Unfriendly user interface
- High transaction costs
The two main beneficiaries of the Pump.fun memecoin frenzy have been Solana and Raydium, Matrixport notes. However, as the daily transaction activity declines, the momentum is slowly fading.
They also noted that over the past 30 days, the number of daily memecoins launched on Pump.fun dropped by 16%, showing a decrease in interest.
According to Dune data, since January 23 when over 71,000 memecoins were launched on Pump.fun, the numbers decreased significantly reaching around 50,000/day this month.
Dune dataTRUMP Memecoin, Behind The Pump.fun Slowdown
Matrixport noted that a key factor behind this slowdown is the TRUMP memecoin, recently launched on Solana, which attracted a surge of retail investors at “unfavorable hefty” prices. A lot of them bought the coin at $60., only to see it drop to $20, triggering significant losses.
This likely dampened the overall enthusiasm as daily transactions peaked on January 23 at 71,758 – this coincided with the peak hype around the TRUMP memecoin.
The TRUMP coin reached its ATH on January 19 above $70, and it’s currently trading at $17.6.
However, amidst a volatile market, Bitcoin remains surrounded by optimism amidst rising interest, whale accumulation , and global efforts to push adoption.
