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Over the weekend, the crypto market experienced a bloodbath, leaving BTC more than 50% down from its all-time high price of $69k established just around 2 months ago. This BTC sell-off, which kicked off during the Asian trading hours on Friday, continued aggressively into the weekend, triggering a collapse across the broader crypto market. ETH sank as low as $2,300 at some point over the weekend, whilst most major mid- to large-caps also suffered, on average, 30-40% drawdowns. Thankfully, and as of the time of writing, BTC seems to be stabilizing above the $35k support zone for now. However, the near-term future looks bleak for the overall crypto market if we were to consider the macroeconomic conditions and climate, as most market participants seem to be bracing themselves for the central bank to deliver on their plan to initiate an extremely fast normalization cycle to combat the rising inflation. Moreover, if the popular narrative that attributes BTC's rally in the past year largely to the global pandemic-related fiscal stimulus holds any water at all, the impending tightening of the monetary policy as well as the increasing pervasiveness of risk-off sentiments are very bad news for the crypto market indeed. Not all is lost though, as several key on-chain metrics seem to suggest an alternative outlook. For one, most long-term BTC HODL-ers remain undeterred by the recent shakeout. In fact, many of said HODL-ers are still accumulating aggressively in conviction even as BTC's price plunges into unexplored on-chain territories. Further, BTC's exchange net volume has flipped to red again, suggesting that more coins are being taken off exchanges and stored into cold-wallets by said long term HODL-ers in order to help them weather through these tumultuous times.
This weekend saw the massive liquidation of nearly $2 billion worth of leveraged positions as BTC plunged below the $35k handle. A local bottom, going by historical patterns, is often preceded by persistently negative funding rates. However, funding rates were actually relatively neutral prior to the recent vicious shakeout, and have remained in a tight range since. This drawdown thus serves as a very timely reminder of the crypto market's tendency towards extreme volatility, and also offers some counterevidence with regard to a long-term bearish assessment of said crypto market. Such an assessment can be considered a rather premature one, as the market is still eagerly awaiting more conclusive macro signals that we will definitely be keeping an eye on in the days to come.
Over the weekend, the Solana network experienced a severe outage (at quite possibly, the worst timing ever). As the broader crypto market began to plummet on Friday, many traders found themselves unable to execute transactions on the Solana network. On Saturday, Solana's official Twitter account acknowledged that the network "(was) experiencing high levels of congestion", and that the Solana team was working hard to ameliorate the overcrowded state of the network. Thankfully, they also assured users that important improvements to the overall network can be expected to be rolled out in the next 8-12 weeks so that something like that will not happen again. Let's hope they get it right this time around, as many unfortunate Solana users were unfairly liquidated from their decentralized finance (DeFi) investment positions because of the recent outage.