Altcoins
US Employment Data Negatively Impacts Altcoin Prices; Solana (SOL) Price Analysis
The cryptocurrency market suffered significant losses on Friday, with Bitcoin falling below the crucial $55,000 support level, triggering widespread declines across the sector.
Altcoins such as Solana (SOL), Ethena (ENA), and EOS have seen a sharp decline, each dropping more than 10% in 24 hours. As a result, the total market cap of all coins has plummeted from its yearly high of $2.7 trillion to $2 trillion.
The cryptocurrency price slide was further exacerbated by the release of solid nonfarm payrolls (NFP) data from the United States. The Bureau of Labor Statistics reported that the economy added 206,000 jobs in June, beating the 191,000 forecast. This figure also beat Wednesday’s ADP report, which indicated that the private sector added 150,000 jobs in July.
The report also showed steady wage growth in June, with average hourly earnings rising 3.9% year over year. However, not all indicators were positive; the unemployment rate increased slightly from 4.0% in May to 4.1% in June. Despite this small increase in unemployment, the labor market is in solid health, having added more than 1.57 million jobs this year.
SOL, ENA, EOS prices. Source: TradingView
The Federal Reserve’s stance on interest rates in a context of constant inflation
The latest employment data suggests that the Federal Reserve is unlikely to rush to cut interest rates as inflation remains relatively stable. Recent data revealed a slight deceleration in the headline consumer price index (CPI) to 3.3% in May, while the personal consumption expenditures (PCE) index remained steady at 2.5%.
Fed Chair Jerome Powell recently expressed the need for more evidence of declining inflation. In addition, minutes from the latest Fed meeting suggest a potential rate cut later this year, perhaps in December.
In this context, the Federal Reserve’s firm stance is expected to put further pressure on risky assets, including: cryptocurrencies such as Ethena, Solana, EOS, and Bitcoin. This development coincides with the various challenges these digital currencies are facing. For example, Bitcoin has fallen below the critical support level in its double-top pattern, signaling further potential declines.
Adding to market uncertainty, Germany has started liquidating its Bitcoinsresulting in increased balances on cryptocurrency exchanges. Additionally, wallets linked to the infamous Mt. Gox incident have been active, moving their coins, which could impact market dynamics.
Political factors in the United States could also play a role in the trajectory of the cryptocurrency market. Speculation is growing that President Joe Biden may not seek reelection, potentially paving the way for a younger candidate who could have a better chance against Donald Trump in the upcoming election. Trump is generally seen as more supportive of the cryptocurrency sector.
In light of these technical and fundamental challenges, the near-term outlook for cryptocurrencies remains bearish, with the potential for further declines in their values.
How is Solana Doing? Solana (SOL) Price Analysis
The 9-day exponential moving average (EMA), shown as a blue line and currently positioned at about $141.27, is crucial in assessing the near-term trend of Solana. With Solana price fluctuating below this EMA, there is an indication of potential bearish sentiment in the market, making the EMA a significant resistance barrier challenging any upside moves.
In terms of momentum, the Relative Strength Index (RSI), displayed in light purple, has risen to around 60.11 after rising from lower levels. This move into the “60” territory signals increasing buying momentum, although it remains below the overbought marker of 70, which typically suggests the likelihood of a market pullback.
Recent trading patterns for Solana depict a series of peaks and troughs, with the price on an upward trajectory after a substantial decline. This recovery is characterized by a rise from a low around $131.24, testing the strength of existing support levels. The price has risen to around $133.30, marking a promising trend, but still requires a decisive breakout above the EMA to firmly establish a reversal from the prevailing downtrend.
Major support and resistance zones
The primary support for the asset in question is currently identified around $131.24. This level has proven to be a significant floor, as demonstrated during a recent price drop where a bounce occurred, suggesting that this area is where buyers typically step in, creating upward pressure. A break below this level could lead to further price declines, marking it as a crucial point for traders to watch.
If the primary support is compromised, the secondary support near $128.00 becomes relevant. This level, marked by previous instances of the price finding stability after declines, could act as an additional safeguard against downtrends, offering a potential juncture for price recovery.
On the resistance front, the immediate hurdle is around $141.27, which is aligned with the 9-day exponential moving average (EMA). This EMA currently poses dynamic resistance, with the price often struggling to maintain breaks above this level, indicative of persistent selling pressure. A breakout of this barrier could signal a shift to an uptrend, suggesting that the market may be ready to gain momentum to the upside.
Further up, a strong resistance is expected around $144.00. If the asset breaks above the EMA, this next level has historically acted as a significant ceiling, with price highs often followed by pullbacks. A breakout here could signal an escalation in buyer dominance, potentially paving the way for an extended uptrend.