- Interest rates will be higher for longer.
- The latest dip was a fire-sale moment for Solana.
Even as the Federal Reserve signals higher interest rates for longer, Solana is bucking the trend. The blockchain’s native SOL token rallied a whopping 12% overnight, making it the biggest bullish mover among the market’s top 10 largest tokens.
The move comes despite hawkish comments from Fed Chair Jerome Powell on Wednesday.
He signaled that the US central bank would continue to keep interest rates high — which is often bearish for stocks and cryptocurrencies — as it fights inflation.
Bitcoin and Ethereum, up 2% and 3%, respectively, have yet to fully recover after Powell’s comments.
Only SOL has managed to recoup gains shed earlier this week.
Fire sale
Alex Krüger, a co-founder of crypto advisory boutique Asgard Markets, said that investors used a drop in prices to buy up even more SOL and other “small-cap” tokens.
“People bid on what they thought was the strongest once they thought the bottom may be in,” he told DL News.
Other market movers Wednesday included buzzy memecoins Pepe, Bonk, and Dogwifhat.
The latter two coins were also built and launched on Solana and have been a boon for the network.
Earlier this year, the memecoin frenzy, spearheaded by Bonk and Dogwifhat, generated more fees on Solana than they did on Ethereum.
Brian Rudick, senior strategist director at GSR, said that Thursday’s rally also has memecoins to thank.
“Many memecoins like Bonk and dogwifhat are rallying, leading to hopes of rising daily active users, DEX trading volumes, and transaction fees for the network,” he said.
FTX sales ‘priced in’
In addition to the Fed’s indication that it will keep rates higher for longer, the FTX estate’s $7.5 billion stash in Solana tokens has haunted the cryptocurrency.
The bankruptcy estate of the collapsed crypto exchange said it would sell its holdings on the market to make creditors whole.
The large ongoing sale has spurred investors like Galaxy Digital and Pantera to scoop up the discounted assets and act as a backstop.
Pantera has even launched a bespoke fund of $250 million to buy more Solana.
Despite the millions in tokens being sold, Michael Cahill, CEO of Douro Labs, says the auctions are already reflected in the price.
Douro Labs is the core contributor to the popular Solana oracle network Pyth.
“The market has been pricing in the FTX SOL sales for the last few weeks, and now that there has been some news, it’s rebounding,” Cahill told DL News, highlighting the next tranche of SOL tokens expected to hit the market soon.
Liam Kelly is a Berlin-based DL News’ correspondent. Contact him at liam@dlnews.com.