On the 6th of February we saw Solana hitting just below $70, but this didn’t hold for long as the price quickly reversed back above $75 and didn’t close below even $75. The last time we saw the price close below $70 was on the 18th of December 2023, and now just over 2 years later we look like we might be seeing a close below $70 again.
The same story is being played out across multiple other cryptos. This is not a coincidence, but it is something that was expected and could be expected again in the future. Historically we have seen that the smaller market cap crypto (altcoins) tends to follow right behind Bitcoin. When Bitcoin makes new all time highs, the smaller caps do as well.
In the short term this is not the most obvious thing, but if you look at the full history of crypto price charts you will see that a lot of them look exactly the same because of Bitcoin. So, whenever we want to determine what Bitcoin might want to do in the future, we must look at what exactly drives its price. As of right now, the only thing that really drives its price is supply and demand. Now, if you didn’t know, Bitcoin has a cycle every four years called the halving, which essentially halves the value of each mined block on the Bitcoin blockchain. This means that every four years it gets harder and harder to get more Bitcoin and this drives up demand and drives down supply, which directly makes it more valuable because of how scarce it is becoming.
This can be fact checked by simply looking at the price chart, you will see that right after the halving it makes new all time highs, but almost every time after the new all time highs we see a bear market for 1 or 2 years before the cycle repeats again. And since Solana is a newer asset compared to Bitcoin, it is much more volatile and has lost almost 80% of its value since all time highs occurred and will likely create hundreds of percent of return when the bull market returns.
Since the bear market hasn’t been around for that long, it is looking like we might see much, much lower prices than we already have. This means that a lot of money will still be lost in the markets within the upcoming months.
(Just my opinion, not financial advice)