Nov 7, 2022 at 06:39Solana tokens rose in price rapidly in the lead-up to and over the weekend. But as early as Monday, according to unofficial leaks from the press, it became known about mass layoffs at the originator of this growth, Meta. The market rather quickly gained back the rapid growth, meeting the new week with sales of cryptocurrencies.
How well it all started
Solana’s (SOL) capitalization skyrocketed 9% over the weekend, the best result in the top 30 cryptocurrencies. The developers of this blockchain tried their best to work off the “crypto gift” of Meta Corporation, which opened Instagram and Facebook users access to NFT tokens from this network.
This event was the occasion for launching numerous airdrops from the creators of popular collections of unique tokens of NFT marketplaces placed on Solana. Various raffles and contests with free giveaways provided a burst of user activity on this blockchain, which was registered and utilized by speculators. The intensity of blockchain transactions, in the presence of an overall positive trend, always leads to an increase in cryptocurrency purchases.
The SOL coin was the most undervalued in the top 10 cryptocurrencies before the pump. Investors sidestepped Solana at a time of general cryptocurrency growth that began last week, due to the actions of Germany-based provider Hetzner. As we wrote earlier, the hosting provider unexpectedly blocked some nodes on the Solana network.
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Taking into account that this cloud service accounts for 40% of nodes and 20% of SOL staking, investors saw a conflict with the provider as a problem and were afraid to enter into this asset on the wave of general growth. As a result, the price of this altcoin was below the September highs, which were overcome by the other major assets last week. Therefore, such a sudden spike in SOL price was also caused by the low base effect.
A sudden pullback in value
Monday saw a massive sell-off in the opening hours of the market. Bitcoin lost nearly 3% after The Washington Post released an article with insider information about Meta’s plans. According to the leak, the corporation that owns Facebook and Instagram will cut thousands of employees on Wednesday for the first time in 18 years. The crypto market took the news extremely negatively.
How can I make money on this?
The Solana example shows well that altcoin growth is often short and impulsive, so you either need to keep a close eye on the news background and activity in the blockchain you are interested in, or invest passively for the long term. In the case of investing, everything is clear — you can patiently wait for such rare bursts to profitably lock in your position at an opportune moment. If you want more active participation in the form of trading — you will have to spend a lot of time watching the news, as well as sitting at the trading terminal to be ready to close a position as quickly as you open. A quick reaction and strong nerves are what you will need in this case.
It is clear that the current sell-offs of cryptocurrencies, including Solana, are temporary, on-the-news in nature. Ironically, it was Meta that first caused this pump, and two days later it caused a reverse dump.
But the real volatility (and the opportunity to make or lose money) will come in a week — after the results of the midterm elections in the U.S. Congress, the results of which may scare buyers not only in the cryptocurrency market. During such periods, it is better for most people to stay out of the market because the unpredictability in the run-up to such big political events is very high.
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