US Employment Figures Impact Altcoin Prices Negatively; Solana (SOL) Price Analysis

On Friday, the cryptocurrency market faced significant losses, with Bitcoin falling below the crucial support level of $55,000, ushering in widespread declines across the sector.

Altcoins such as Solana (SOL), Ethena (ENA), and EOS experienced a sharp drop, each falling over 10% within 24 hours. Consequently, the total market capitalization of all coins plummeted from the year-to-date peak of $2.7 trillion to $2 trillion.

The downturn in crypto prices was further exacerbated by the release of strong nonfarm payroll (NFP) data from the US. The Bureau of Labor Statistics reported that the economy added 206,000 jobs in June, surpassing the anticipated 191,000. This figure also exceeded the ADP report from Wednesday, which indicated that the private sector added 150,000 jobs in July.

Additionally, the report highlighted a steady wage growth in June, with average hourly earnings rising by 3.9% year-over-year. However, not all indicators were positive; the unemployment rate increased slightly from 4.0% in May to 4.1% in June. Despite this minor uptick in unemployment, the labor market shows robust health, having added over 1.57 million jobs this year.

Federal Reserve’s Stance on Interest Rates Amid Steady Inflation

The latest jobs figures indicate that the Federal Reserve is unlikely to rush into reducing interest rates, as inflation remains relatively stable. Recent data revealed a slight deceleration in the headline Consumer Price Index (CPI) to 3.3% in May, while the Personal Consumption Expenditure (PCE) index held steady at 2.5%.

Fed Chair Jerome Powell, in a recent statement, expressed the need for more evidence of declining inflation. Moreover, minutes from the latest Fed meeting suggest a potential rate cut later this year, possibly in December.

Given this backdrop, the Federal Reserve’s firm stance is expected to exert additional pressure on risk assets, including cryptocurrencies such as Ethena, Solana, EOS, and Bitcoin. This development coincides with various challenges these digital currencies are facing. For instance, Bitcoin has fallen below the critical support level in its double-top pattern, signaling further potential declines.

Adding to the market’s uncertainties, Germany has begun to liquidate its Bitcoin holdings, resulting in increased balances on cryptocurrency exchanges. Additionally, wallets linked to the infamous Mt.Gox incident have been active, moving their coins, which could influence market dynamics.

Political factors in the US could also play a role in the cryptocurrency market’s trajectory. Speculation is growing that President Joe Biden might not seek re-election, potentially paving the way for a younger candidate who could have a better chance against Donald Trump in the upcoming election. Trump is generally viewed as more favorable towards the cryptocurrency sector.

In light of these technical and fundamental challenges, the near-term outlook for cryptocurrencies remains bearish, with potential for further declines in their values.

How’s Solana Performing? Solana’s (SOL) Price Analysis

The 9-day Exponential Moving Average (EMA), which is shown as a blue line and currently positioned at approximately $141.27, is pivotal for assessing the short-term trend of Solana. With the price of Solana fluctuating below this EMA, there is an indication of potential bearish sentiment in the market, making the EMA a significant resistance barrier that challenges upward movements.

In terms of momentum, the Relative Strength Index (RSI), displayed in light purple, has risen to about 60.11 after increasing from lower values. This entry into the ’60’ territory signals growing buying momentum, although it remains below the overbought marker of 70, which typically suggests the likelihood of a market pullback.

Recent trading patterns for Solana depict a series of peaks and troughs, with the price on an upward trajectory following a substantial dip. This recovery is characterized by an increase from a low of around $131.24, testing the strength of existing support levels. The price has risen to approximately $133.30, marking a promising trend, but it still requires a decisive breakthrough above the EMA to firmly establish a reversal from the prevailing bearish trend.

Major Support and Resistance Zones

The primary support for the asset in question is currently identified around $131.24. This level has proven to be a significant floor, as evidenced during a recent price dip where a rebound occurred, suggesting that this zone is where buyers typically intervene, creating upward pressure. A breach below this level could lead to further price declines, marking it as a crucial point for traders to watch.

If the primary support is compromised, the secondary support near $128.00 becomes relevant. This level, marked by previous instances where the price found stability after declines, could serve as an additional safeguard against bearish trends, offering a potential juncture for price restoration.

On the resistance front, the immediate hurdle is approximately $141.27, aligned with the 9-day Exponential Moving Average (EMA). This EMA currently poses dynamic resistance, with the price frequently struggling to maintain breaks above this threshold, indicative of persistent selling pressure. Overcoming this barrier could signal a shift to a bullish trend, suggesting the market might be ready to gain upward momentum.

Further up, strong resistance is anticipated around $144.00. Should the asset surpass the EMA, this subsequent level has historically acted as a significant ceiling, with price highs often followed by retreats. A breakthrough here could denote an escalation in buyer dominance, potentially paving the way for an extended uptrend.