5 min readBitcoin is falling to 121k after reaching a record high of 126.12k earlier in the week. Elsewhere, the crypto market is under pressure, with Ethereum down over 3.5%, Ripple down 7.5%, and BNB dropping 5% over the past 24 hours. The total cryptocurrency market cap has fallen 1.85% over the past 24 hours to $4.11 trillion.
Profit-taking has been the primary cause for BTC’s move lower from its record high. This is not uncommon for the largest cryptocurrency to see a minor move lower and some consolidation after reaching a major milestone. This was the case for both 120k and 110k.
However, recent profit-taking has been limited according to CryptoQuant data, which could mean that the dip may be short-lived. The data showed that the total net realized profit of BTC holders across the past 30 days is at 0.26 million BTC, which is 50% below July’s peak of 0.53 million BTC and well below the levels seen in March and December 2024.
In addition to profit taking, the revival of USD strength is creating a headwind for BTC and, more broadly, risk assets, as well as Gold. The USD has risen to a two-month high, boosted in part by weakness in the EUR and the JPY, owing to political situations in France and Japan, but also as treasury yields rise. The lack of fresh US economic data due to the government shutdown is indirectly offering support to the USD.
The market is pricing in a 95% chance of a 25 basis point rate cut in October, but has lowered expectations of a December rate cut from 90% a week ago to 80%.
Looking ahead, the University of Michigan confidence data, scheduled for release tomorrow, is one of the few data points that will be released during the shutdown. Deteriorating confidence could pull the USD lower and revive BTC’s upward momentum.
SOL struggles as on-chain data weakens
Solana is falling over 3.7%, putting losses this week at 4% following a 12% gain in the previous week. So far, October remains positive, with the cryptocurrency rising 4.7% this month, marking the fourth straight monthly rise and pushing the price above $200. While this sounds impressive, it still falls short of BNB, which trades 87% higher year to date, representing four times the gains seen in Solana.
On-chain metrics could provide some of the answers. Transaction volumes and daily active addresses have been declining for some time, pointing to a network that is struggling to expand while its competitors are outperforming.
Data from Glassnode showed that daily active addresses declined from 5.8 million at the start of the year to 2.7 million, marking a 54% decline. Meanwhile, weekly transaction volume has dropped from 724 million to 500 million.
These trends are more concerning given the bull market, as institutional adoption appears to be accelerating amid the launch of Solana treasuries and early spot SOL ETF demand.
Will the Alpengrow upgrade mark a change?
Attention is turning towards the Alpenglow upgrade, which is designed to make the network faster, sturdier, and easier to operate. According to VanEcxk’s monthly crypto report, the update is described as the most significant and most transformative in Solana’s history.
Alpengrow overhauls Solana’s consensus mechanism, the process by which validators agree on transactions. Currently, the network finalises transactions in around 12 seconds, Alpenglow will reduce this to 150 milliseconds.
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