📢 February Signals
🗒️ Market update
Gold and NASDAQ are near all-time highs, while Bitcoin is lagging, and altcoins are in the dumps. What’s going on?
Gold often leads Bitcoin. Last August through October, gold rallied hard, leaving Bitcoin behind—only for Bitcoin to more than catch up in November and December. On the topic of gold, Fort Knox could be getting a DOGE (tongue-in-cheek) audit soon, having avoided public scrutiny since the 1970s. A surprise isn’t out of the question. The RBA also confirmed that “the existence of fake gold bars has been detected, in the past, by duplicate refiner serial numbers.” Good as gold? Certainly not as good as Bitcoin!
It’s somewhat surprising that major news, like the Abu Dhabi sovereign wealth fund buying US$440 million of Bitcoin ETFs, didn’t spur a rally—nor did the 13F SEC filings confirming that over 1,100 institutional investors now hold BTC ETFs. Meanwhile, Binance has been selling significant amounts of its reserves, dropping from ~47,000 BTC in January to under 3,000 BTC in February, and from ~440k SOL down to 4k SOL. Interestingly, no BNB was sold during this time. This selling is likely to help pay part of their US$4.3 billion DOJ fine due next month, which has pressured prices downward. However, they appear to be done selling, as data suggests BTC selling pressure is easing.
Solana’s Tumultuous Month
Solana faced a rough month. Last week’s launch of the $LIBRA coin on Solana felt like the straw that broke the camel’s back. Like other recent pump-and-dump schemes, it was initially promoted by a high-profile, trusted source (Javier Milei in this case), soaring to a $4 billion market cap before crashing 90% after the third-party team behind the launch rug-pulled investors. A similar pattern occurred with $MELANIA (launched by the same team), where insiders cashed out millions while retail investors bought in, leading to an inevitable crash.
Are we at Peak Scam? There’s growing backlash from the community, arguing that these launches are seriously detrimental to the ecosystem. This time, however, the bad actors have been identified, potentially marking a turning point where the community becomes more vigilant about who and what they promote. Notably, Milei is facing impeachment calls over this scandal, so real consequences may be on the horizon.
We believe the worst is over for SOL. Meme coins are a casino, but hopefully, protocols will conduct more due diligence or enforce fairer launch practices, making the odds less stacked against retail investors. Regulation is coming but will likely focus on low-hanging fruit like stablecoins. DeFi and meme coins will need some self-regulation.
The market is heavily stacked on the short side for Solana (see liquidations map below, everything right of the vertical red arrow is short), making a short squeeze very possible. With Larry Fink stating that a SOL ETF approval could come as early as this month and FTX cash repayments hitting creditors’ accounts from this week, there’s cause to feel a rebound in SOL and the broader market is warranted.
Get in touch to discuss how digital assets fit in your portfolio:
🗓️ Key dates to watch
- 28 February – Core PCE
- 7 March – Non Farm Payrolls
- 12 March – CPI
- 19 March – FOMC
💡The Merkle Tree Capital “Why?”
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