As of June 21, 2024, Lido has experienced a surge of 20.57% in the past seven days. However, the likelihood of continued upward movement seems limited. The primary factor is its proximity to a historical resistance level at .30 on the daily timeframe. This resistance level has historically posed a significant barrier, and without a decisive breakout above .30 and, subsequently, .40, sustained upward momentum remains doubtful.
Table of Contents
Technical Indicators
Resistance and Support Levels
Current resistance: .30
Additional resistance: .40
Support level: .00
TradingView
Relative Strength Index
The current RSI is approaching the historical resistance level of 60. This suggests that the price is entering overbought territory, which could limit further gains.
Fibonacci Retracement
If Lido fails to break through .30 and .40, a drop to the Fibonacci retracement levels between .997 and .016 (golden pocket) is likely.
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Network Value to Transactions Signal
The NVT signal is a key metric for evaluating Lido’s valuation. An NVT signal above 55 indicates overvaluation, while a signal below 25 suggests undervaluation. As of June 21, 2024, Lido’s NVT stands at 44, up from 35 a week ago, indicating it is currently fairly valued. The NVT ratio peaked at 79.5 in March, which demonstrates the potential for an upside, but current market conditions and historical performance suggest otherwise.
Glassnode
Historically, the period from June to September tends to be slow for the cryptocurrency market, with an average return of 1.45%. Given that Lido’s performance often correlates with Bitcoin and especially Ethereum, major movements in these cryptocurrencies could impact Lido’s price trajectory.
Bitcoin and Ethereum Trends: If Bitcoin and Ethereum experience downturns, Lido is likely to follow suit.
Ethereum Staking: As a staking platform for Ethereum, Lido’s performance is closely tied to Ethereum’s market movements.
Strategy
Considering the current market analysis, it is advisable to adopt a cautious approach:
Short Position: Given the strong resistance at .30, consider going short on Lido at the current levels.
Reentry Point: Look to reenter around the .00 support level, provided it holds this line.
Monitoring BTC and ETH: Keep a close watch on the broader market trends, particularly Bitcoin and Ethereum, as their movements will likely influence Lido’s price.
Italy is reportedly considering increasing fines for crypto crimes as part of measures to reduce market manipulations.
Italy‘s government is mulling tougher penalties for those who manipulate the crypto market, Reuters has learned, citing a draft decree.
The proposed legislation, if approved, would impose fines ranging from €5,000 to €5 million (,400 to .4 million) for crimes such as insider trading, unauthorized disclosure of inside information, and market manipulation. The decree designates the Bank of Italy and market regulator Consob as the primary overseers of crypto activities, with a mandate to maintain financial stability and ensure the orderly functioning of markets.
In early 2023, the Bank of Italy emphasized the need for a strong and risk-based regulatory framework surrounding stablecoins, aiming to avert a potential worst-case scenario of a destabilizing “run” on these digital assets. The financial regulator particularly highlighted the need for regulatory attention, particularly towards stablecoin issuers, due to their close ties with decentralized finance.
Later on, Italy’s central bank announced the creation of a supervisory environment in anticipation of the Markets in Crypto-Assets Regulation (MiCA), the European Union’s forthcoming regulatory standards for the crypto industry.
However, it remains unclear whether this supervisory framework has been fully implemented. At that time, Ignazio Visco, then-governor of the Bank of Italy, noted that the central bank’s surveys indicated only about 2% of Italian households held “modest amounts, on average” of crypto, with the exposure of Italian financial intermediaries to the crypto market also being very limited.
The billionaire Winklevoss twins have each donated million in BTC to ex-President Donald Trump in response to the weaponization of the SEC against crypto.
The founders of the Gemini crypto exchange, Cameron and Tyler Winklevoss, have donated 30.94 BTC (worth around million) to former U.S. President Donald Trump, who is hoping to return to the White House in 2024.
In an X statement, Tyler Winklevoss said he will be voting for Donald Trump in November, adding the decision was made in response to a hawkish attitude toward crypto from the Biden Administration.
“Over the past few years, the Biden Administration has openly declared war against crypto. It has weaponized multiple government agencies to bully, harass, and sue the good actors in our industry in an effort to destroy it.”
Tyler Winklevoss
The Gemini co-founder claims the Biden Administration’s actions have been “nothing short of an unprecedented abuse of power wielded entirely for twisted political gain at the complete expense of innovation, the American taxpayer, and the American economy.”
The Winklevoss twins have been vocal about their discontent with the U.S. Securities and Exchange Commission (SEC). Tyler Winklevoss highlighted that the SEC “has not written a single rule for the crypto industry to help any of its participants understand how to navigate the regulatory landscape for this new asset paradigm.”
Cameron Winklevoss echoed his brother’s sentiments and support for Trump, asserting that the former president “will put an end to the Biden Administration’s war on crypto.”
In early 2023, the SEC charged Genesis Global and Gemini with offering and selling unregistered securities to retail investors through the Gemini Earn program, which collapsed following Genesis’ bankruptcy triggered by the November 2022 crypto market crash.
Few platforms have faced as much skepticism as Solana. Critics often portray it as a centralized network plagued by frequent outages. However, such a narrative does not align with the actual data and progress witnessed within the Solana ecosystem. This article seeks to debunk these misconceptions by comprehensively analyzing Solana’s key metrics.
Contrary to the prevailing negative perception, Solana showcases remarkable growth and innovation across several fronts. The increasing volumes of stablecoins transacted on its network, and the higher decentralized exchange (DEX) volumes compared to Ethereum highlight Solana’s expanding utility. Furthermore, the platform’s superior data throughput showcases its technical capabilities and resilience. Additionally, the surge in new addresses and daily active users further reflects the growing confidence and adoption among the broader crypto community.
By examining these metrics, this article aims to provide a balanced and data-driven perspective on why Solana represents an undervalued asset in the cryptocurrency market as of June 2024.
Table of Contents
Centralization
The decentralization of a blockchain network is complex and cannot be evaluated simply on one metric. A deep dive into which network is truly decentralized based on every detail could fill an entire article. Therefore, we will focus on the Nakamoto coefficient. The Nakamoto coefficient measures the minimum number of entities in a network required to collude to disrupt the system. For proof-of-stake networks like Solana and Ethereum, a 33% stake is significant, while for proof-of-work networks like Bitcoin, 51% control is crucial.
As of June 20, 2024, Solana has 1,525 active validators, with 20 holding more than 33% of the stake. On the other hand, Ethereum has 1,024,619 active validators, with just two entities controlling more than 33% of the stake. A validator must stake 32 ETH to become a node on the Ethereum network. The issue here is that one entity can control multiple validators, masking the actual level of decentralization.
Active Validators and Nakamoto Coefficient, June 20, 2024
According to Dune, Lido and Coinbase hold more than 33% of the stake in Ethereum. If each node holds 32 ETH, then out of the 1,024,629 active nodes, these two entities potentially control 432,389 unique validators. This concentration of control under two entities compromises the decentralization ethos.
ETH Stakers Pie Chart, June 20, 2024
For Bitcoin, the network has 17,692 full nodes that have not been pruned, with 7,516 capable of disrupting the network. Unfortunately, no information exists on each node’s individual hashrate. The calculation of this number used the Peer Index (PIX). The PIX value, ranging from 0.0 to 10.0, updates every 24 hours based on a node’s properties and network metrics, with 10.0 being the most desirable. Nodes with a PIX value of 5 or more were considered.
Some may argue that Bitcoin’s decentralization should be evaluated through hashrate distribution. Currently, two mining pools, Foundry USA and Antpool, control more than 51% of the network’s hashrate.
Bitcoin Mining Pools Pie Chart, June 20, 2024
However, it is incorrect to consider these pools as the network’s controllers because they are pools of individual miners. Mining pools allow miners to combine their computational resources to increase their chances of solving blocks and earning rewards. If a pool begins to act maliciously, individual miners can simply switch to a different pool, maintaining the network’s decentralization.
While the decentralization of blockchain networks is multifaceted and cannot be accurately assessed by a single metric, the Nakamoto coefficient provides a useful lens for comparison. Solana’s position is not as concerning as it may initially seem. With a Nakamoto coefficient indicating that 20 validators hold more than 33% of the stake, Solana appears more decentralized than Ethereum, where just two entities hold more than 33% of the stake. Moreover, even though Solana is not as decentralized as Bitcoin, it still maintains a robust decentralization level, contributing to its security and reliability.
Stability
Solana, known for its high-speed transactions and low fees, has faced scrutiny regarding its network stability due to several outages it has experienced in recent years. However, a closer look reveals that the situation might be overblown. The network’s stability becomes apparent despite the occasional hiccup when examining Solana’s uptime history.
In 2021, Solana experienced no outages and demonstrated a full year of uninterrupted service. However, 2022 saw a significant increase, with 27 outages totaling 108 hours. Moving forward, 2023 showed considerable improvement, with only two outages totaling 19 hours. In 2024, up until June 19, the network had just one outage lasting five hours. These numbers, while notable, tell only part of the story.
Solana’s Uptime History, 2021-2024
When considering uptime, these outages represent a tiny fraction of the total operational hours. For instance, in 2022, despite 27 outages, the network maintained functionality for 99.47% of the year. Similarly, the 19 hours of downtime in 2023 and 5 hours in 2024 up to mid-June account for negligible interruptions in an otherwise stable performance.
The main culprit of these outages is Solana’s design. The network prioritizes speed and low costs, which attract heavy usage. This high traffic can lead to congestion and instability. For example, Solana produces a block every 400 ms, much faster than other blockchains. Due to the rapid production rate, when block creation halts for an hour or two, it appears more severe. However, other blockchains, even Bitcoin, also face downtime. For instance, it took over two hours to mine block 689301 following block 689300.
Solana’s strategy of pushing its performance boundaries allows it to encounter and resolve real-world challenges that theoretical models and simulations cannot foresee. This approach resembles SpaceX’s iterative process of learning from failures to achieve rapid innovation. Although some critics view Solana’s historical downtimes as a liability, this rigorous testing and problem-solving phase ultimately provides a significant competitive advantage.
Solana by the Numbers
Daily active wallets
Solana currently has 1,600,000 daily active wallets, significantly higher than Ethereum’s 367,000 daily active wallets.
Daily Active Addresses, January 2024 – June 2024
Inflows and outflows
Additionally, between April 2023 and June 2024, Solana had 1.73 million in inflows and 4.21 million in outflows. In contrast, Ethereum had 4.17 million in inflows and 4.1 million in outflows. This results in a net inflow of about 0 million for Solana, compared to Ethereum’s net inflow of approximately ,000.
Total Transferred Amount Between Bridges, April 2023 – June 2024
DEX volumes
In terms of DEX volumes, Solana has also performed excellently. It has begun to match or exceed Ethereum’s trading volumes on several occasions. This is significant because Solana’s market cap is about billion, much smaller than Ethereum’s 0 billion. Additionally, Solana’s token was launched only four years ago, compared to Ethereum’s nine years in the market. Despite being newer and smaller, Solana’s ability to compete with Ethereum in DEX volumes showcases its potential.
DEX Trading Volumes, January 2024 – June 2024
Stablecoin transfer volumes
Solana’s high stablecoin transfer volumes stem from its fast transaction speeds and low fees, making it attractive to users. The network’s ability to process many transactions efficiently supports high-volume activity. Additionally, Solana’s focus on scalability and user-friendly experience further drives its dominance in stablecoin transfers.
Stablecoin Transfer Volumes, January 2024 – June 2024
Revenue
Solana’s revenue has surged to 50% of Ethereum’s in mid 2024, an unprecedented high. Historically, during the peak activity periods of 2021 and 2022, Solana’s revenue was less than 1% of Ethereum’s. At the beginning of 2024, this figure was approximately 10%. This dramatic increase in revenue ratio indicates Solana’s growing usage and economic activity on the network.
Solana’s Revenue, April 2020 – June 2024
Conclusion
Solana’s narrative as a centralized and unreliable network does not hold up against the actual data. With its robust technical capabilities and growing adoption, Solana demonstrates significant progress and resilience. The Nakamoto coefficient shows Solana’s decentralization is more favorable than Ethereum’s, with fewer entities required to collude to disrupt the network. Although not as decentralized as Bitcoin, Solana still maintains a substantial level of decentralization, which contributes to its security and reliability.
Network stability, often criticized due to past outages, shows marked improvement, with substantial uptime and continuous enhancements. Solana’s strategic focus on high performance and scalability results in occasional instability but also rapid innovation and resilience akin to iterative development seen in other cutting-edge tech fields.
Metrics such as daily active wallets, inflows and outflows, decentralized exchange volumes, and revenue indicate Solana’s rising prominence in the cryptocurrency ecosystem. Despite its smaller market cap and younger age, the network’s ability to handle high transaction volumes at low costs positions it as a formidable competitor to Ethereum.
Overall, Solana’s performance and growth reflect a platform that is not only maturing but also setting new standards in the industry, challenging prevailing negative perceptions and establishing itself as a valuable asset in the market.
Pendle price has bounced back in the past few days as its ecosystem growth accelerated and Arthur Hayes bought the dip. It rebounded to an intraday high of .20, 25% above its lowest point this week.
In an X (Tweet), Arthur Hayes, one of the best-known players in the crypto industry, said that he had added Pendle and Dogecoin to his portfolio. According to LookOnChain, Hayes also acquired Pendle tokens worth over 0,000.
Arthur Hayes has been in the crypto sector for years and is best known for founding crypto derivatives exchange BitMex and 100x Group, a company that invests in companies in the crypto industry.
Hayes has been a big buyer
Most recently, Hayes was one of the backers of Ethena, a fast-growing blockchain network that operates USDe. USDe has grown to become the fourth-biggest stablecoin in the world with a market cap of more than .5 billion. It has attracted so many users because of its substantial yield, which stands at over 20%.
Pendle’s ecosystem is also thriving as its total value locked (TVL) has jumped to over .9 billion, making it the fifth biggest DeFi network after Lido, EigenLayer, AAVE, Maker, and Ether.fi.
Pendle helps people gain returns by holding stETH, eETH, and rsETH, which yield 3.95%, 19.11%, and 25%, respectively. These are substantial rewards considering that short-term US Treasuries are yielding less than 5.50%.
Arthur Hayes has joined thousands of other people who have invested in the Pendle token. Data by DEXTools shows that there are over 27,686 PENDLE holders, with one address holding 21.35% of the total supply.
The second address holds 12.2% while the third one holds 11.3% of the total tokens. Altogether, the ten biggest holders control about 69% of its supply.
A key challenge for holders is that Pendle is set to introduce more tokens to the market since there are 155 million in circulation compared to the total supply of over 258 million.
Pendle price has done well since its early days as its total market cap has surged from million in 2021 to over 6 million today.
Notcoin price continued to sell-off on Thursday as its daily volume slumped. Investor focus appear to have shifted to other Telegram tap-to-earn applications like Hamster Kombat, TapSwap, and Yescoin.
NOT traded at .015 on Thursday, down by almost 50% from its highest point this month. This plunge has resulted in its market cap tumbling from over .7 billion to .5 billion.
Data compiled by CoinGecko showsthat the volume of Notcoin traded in all exchanges dropped from 5 million on Wednesday to 0 million. This volume represents the lowest level seen since June 14 and could be viewed a sign that its hype is slowing.
Hamster Combat users dwarf Notcoin
Notcoin price has retreated as the market focused on the upcoming airdrops of leading tap-to-earn platforms on Telegram. Data shows that Hamster Combat’s users have jumped to over 150 million, much higher than Notcoin’s 40 million.
Similarly, TapSwap’s users have soared to over 54 million while YesCoin has more than 11 million users. Some of the other popular tap-to-earn platforms on Telegram are Blum (20 million), Dotcoin (15 million), MemeFi (13.9 million), and BBQCoin (9 million).
Notcoin and other tap-to-earn platforms let users mine cryptocurrencies by just tapping a button on their apps. Eventually, as we saw with Notcoin, these users convert their tokens into fiat currencies when the token listing happens.
The growth of these tap-to-earn networks can be attributed to the ease of use and the number of Telegram users. The most recent data showed that Telegram had accumulated over 900 million users from around the world.
These users can sign up easily and then start earning by tapping a button on the mini app. They can also earn more tokens by doing some simple activities like inviting friends, liking a social media page, and participating in leagues.
Tap-to-earn has become the next iteration of blockchain gaming, an industry that boomed during the pandemic and then faded. At the time, gaming platforms like Decentraland, Sandbox, and Axie Infinity were some of the hottest players in blockchain.
As a result, their tokens surged and attained multi-billion-dollar valuations. They then crumbled and have never bounced back. Therefore, it will be interesting to watch whether Notcoin, Hamster Kombat, Dotcoin, and Blum will have staying power.
Solana could bleed down to an price point as institutional ETFs and meme coin trading slow.
Crypto expert Andrew Kang, co-founder of a crypto-focused venture capital company, suggested in a recent post that market shifts in ETF integration could slow down Solana’s (SOL) bullish sentiment.
Kang believes that Solana (SOL) has shown strong performance recently but could be affected by the unpredictable demand from meme traders. If meme trading decreases in the future, the price of SOL could fall hard to the level.
Kang also mentioned that despite the potential impact of meme traders, the underlying technology and long-term potential of Solana could support its price in the future.
ETF integration
Kang contended that the delayed integration of ETFs into wealth management platforms could significantly impact the cryptocurrency market. Most of the expected influx of ETF money is now projected to come in quarter four or toward the end of the year.
In the absence of substantial ETF inflows, the momentum in the cryptocurrency market could be reversing from upward to downward. However, Kang believes that Bitcoin (BTC) will maintain its strength, with prices unlikely to fall below the ,000 mark.
Ethereum’s expectations
Ethereum (ETH) might sustain its value until the ETF approval, but its upside is projected to be limited to the low ,000s this year, per Kang. If there isn’t sufficient inflow and the numbers fall short, or if there is substantial selling of ETH, ETH could decline to the low to mid ,000 range.
The Ethereum community is often seen as having strong advocacy and understanding, which may lead to high expectations for the impact of ETFs among investors who are not familiar with crypto. However, insights from traditional finance experts indicate relatively low interest in Ethereum ETFs.
Matthew Hougan, Chief Investment Officer (CIO) at Bitwise Asset Management has shared his outlook for crypto – specifically why Ethereum may be good addition to an investor’s portfolio.
Hougan said in an X post there are three reasons one may want to add ETH to their portfolio, and one other reason investors could choose to stick with a Bitcoin-only portfolio.
Hougan cautions that his comments do not constitute investment advice. However, he thinks the upcoming launch of spot Ethereum ETFs in the US means most people may find this a good time to add the world’s second largest cryptocurrency to their wallets.
Why consider ETH for a portfolio?
According to Hougan, it’s down to diversification, Bitcoin and Ethereum’s use cases targeting different and historical analysis. There, three reasons.
Commenting on the diversification aspect, he compares the investment landscape during the dot.com boom to the current crypto market. He wrote:
“It is very hard to predict the future with precision. Ask any investor from the dot-com boom who bought AOL or Pets.com. They got the overall bet right—the internet is going to be big!—but the specifics wrong.”
Today, crypto is an emerging technology with all the potential to change the world. But while it’s impossible to predict the future, one way to go about it is “own the market.” A scenario where its 75% BTC and 25% ETH could be “a good default starting place.”
What does that mean? Today, the market cap for ETH, the crypto asset that powers the Ethereum blockchain, is about 0 billion. That’s about one-third the size of Bitcoin’s .3 trillion. The default starting place for many should therefore be about 75% Bitcoin and 25% ETH.
The second reason why the Bitwise exec thinks it might be wise to add ETH to a portfolio is Bitcoin and Ethereum’s use cases.
While Bitcoin is “the best form of money that has ever existed,” Ethereum’s focus is to make money programmable. Stablecoins and DeFi are among the top applications relying on this new system.
Although difficult to say what applications will make the most the new technology, broader exposure to both BTC and ETH may work for a portfolio.
Ethereum’s primary function is making money programmable. It’s a technological platform for new applications that rely on public blockchains, like stablecoins and DeFi.
For the third reason, Hougan opines, it’s the historical analysis.
“Adding ETH to a portfolio over a full crypto market cycle has historically boosted both your absolute and risk-adjusted returns compared to adding BTC only,” he said.
An example of a portfolio with ETH
A sample portfolio showing performance between May 31, 2020 and May 31, 2024 shows that a traditional 60/40 portfolio had a cumulative return of 31.47% and annualized return of just 7.06%.
In comparison, adding 5% to such a portfolio with 100% BTC allocation has cumulative returns jumping to 54.49% and annualized return at 11.46%. With ETH added, this increases to 56.32% and 11.79% respectively for cumulative and annualized returns.
Notably, the portfolio with ETH added shows both a higher return and lower maximum drawdown.
But Hougan also says:
“My view, in a word: If you want to make a broad bet on crypto and public blockchains, you should own multiple crypto assets. If you want to make a specific bet on a new form of digital money, buy Bitcoin.”
LayerZero (ZRO) price rallied after the highly successful airdrop. It jumped by almost 10%, reaching a high of .40. Its valuation was larger than many well-known brands like Flow, Ethena, Quant, and Ethereum Name Service.
The token rallied even after the developers insisted that all claimants must pay 10 cents to support its ecosystem. The developers hope that the small fee will help it raise million, which will go to the Protocol Guild.
It also rallied after several tier-1 exchanges like OKX, ByBit, and HTX started offering trading in LayerZero in their platforms.
However, history suggests that the token’s price will pull back in the coming days as many airdrop recipients sell their tokens. Just this week, zkSync token crashed after its airdrop as most of its holders liquidated their positions.
Most cryptocurrency prices rise shortly after the airdrop because of the hype among traders and then pullback in the next few days. In May, Notcoin’s price went parabolic and reached a high of .027 on its first day and then crashed by over 50% on the following day.
Similarly, Sei jumped to 1 after its airdrop in August last year and then crashed to .09 within a few weeks. Therefore, there is a likelihood that the ZRO price will follow the same trajectory by dropping in the next few days.
Most tokens bounce back after initial sell-off
On the positive side, most of these tokens tend to bounce back after the initial jump. After falling to .096, Sei eventually bounced back and reached a record high of .15. Similarly, Notcoin surged to a record high of .030 after the initial plunge.
LayerZero has become one of the biggest airdrops this year. Headquartered in Vancouver, the platform runs a technology that enables applications to move data across multiple blockchains.
It is currently compatible with chains like Ethereum, Arbitrum, Optimism, Base, and Avalanche and the developers hope to add more in the coming months. Some of the dApps using the network are Ethena, Stargate, Conflux, and AAVE.
