Polkadot, Solana, Terra, Lead Large-Cap Losses Amid Broader Market Drop
The native tokens of layer 1 blockchains Polkadot, Solana and Terra were among the biggest losers Friday morning amid a fall in the broader cryptocurrency market, data from multiple sources shows.
Polkadot (DOT) was trading at $27 during Asian trading hours, down 7% from Thursday’s peak of $30.16. Solana (SOL) fell 6.6% to $178, while terra (LUNA) traded at $69.43, down 8% from Thursday’s $76.72 high.
Solana/USD chart on Friday (TradingView) (TradingView)
The solana price drop was partly driven by a congestion problem on the Solana network on Thursday that caused its transaction-processing speed to slow down, CoinDesk reported.
Some expect solana’s decline to continue until a major support level is reached. “SOL/USD is heading toward the $145 daily support level,” said Phil Gunwhy, chief marketing officer at Solana-based lending platform Blockasset. “There is not much substantial support along the way until that mark, only the $155.5 daily level which does not look overly convincing in terms of its potential motive force.”
Meanwhile, fundamentals remain strong for large-cap altcoins polkadot and terra, which is the native token of the Luna network. Polkadot’s much-awaited “parachain” feature went live last month, allowing investors and the community to lock up DOT tokens in an auction for the tokens of other blockchains that build atop the main Polkadot blockchain.
As for Luna, according to data from tracking tool DeFi Llama, decentralized finance (DeFi) apps have locked up over $13 billion worth of LUNA and other Terra-based assets like UST on the Luna blockchain. The tokens’ fundamentals were further strengthened by a token-burning mechanism that went live in November.
Meme coins see smaller declines than layer 1 blockchains
Meme coins like dogecoin and shiba inu saw relatively smaller declines. Dogecoin fell 3.7% and shiba inu dropped 4%. Meanwhile, coins associated with Ethereum competitors Algorand and Cardano fell 4.8% and 6.2% respectively. Avalanche, the token for another layer 1 network, fell 3.4% at press time.
The tokens of popular Ethereum mainstays like decentralized exchange Uniswap (UNI) and metaverse game Axie Infinity (AXS) were among the other big losers during Asian trading hours, dropping as much 9% from Thursday highs.
The declines were primarily technically driven and followed those of bitcoin, the world’s largest cryptocurrency by market capitalization, which fell to a low of $47,440 from Thursday’s high of $50,910.
Global risk assets like bitcoin declined on Thursday morning shortly after rating agency Fitch downgraded Evergrande, a Chinese real estate conglomerate with an estimated $300 billion in obligations. Fitch said Evergrande had defaulted and wouldn’t repay its investors, sparking fears of an imminent sell-off in other markets.
Market sentiments were also dented by inflation fears, with the U.S. Federal Reserve’s plans to wind down its bond-purchase program, and by the spread of the Omicron coronavirus.
DISCLOSURE
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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.
