Dispatch #229: Solana solidifies growth

In this patch of your weekly Dispatch:

• High volatility ahead of big macro week
• Solana solidifying
• DeepSeek disrupts AI and the markets

Market cast 

When it rains, it pours

Markets were navigating a volatile moment at the start of the week, with Bitcoin, gold, and major tech stocks all in the red on Monday. This was in reaction to developments in China’s artificial intelligence space, namely ChatGPT contender DeepSeek, and the Bank of Japan’s interest rate hike to a 17-year high. 

Meanwhile, Bitcoin perpetual futures funding rates turned slightly negative, reflecting caution. Historically, such shifts have often aligned with local price bottoms for Bitcoin. There’s also the potential for a short squeeze, where bearish traders close their positions, creating upward price pressure. However, the current flip in funding rates is quite narrow, suggesting it's early to view Bitcoin as an overcrowded short trade. While these developments have prompted some near-term repositioning, many view the current pullback as an opportunity.

With the first FOMC meeting under Donald Trump and key tech earnings scheduled for this week, here’s what we can expect. The recent decline in BTC/USD found support at the 50-day Simple Moving Average (SMA), which currently acts as a dynamic support level. On the downside, the next critical support level to watch is $100,000.

On the upside, Bitcoin shattered the first key resistance level at $100,000, and the next significant barrier is at $106,500—an area that has been tested multiple times.

While long-term oscillators remain neutral, short-term indicators broke the oversold zone, with values over the 30-level, triggering a strong bullish trend for the pair.

The big idea

Solana solidifies strength 

The world’s most-used blockchain: Despite its near-zero fees, Solana recorded a stunning $35 million in daily transaction fees during a recent frenzy driven by U.S. President Donald Trump's Solana-based memecoin phenomenon. The result is clear: Solana is seeing unprecedented activity, proving its ability to handle massive demand. 

Outpacing Ethereum’s transactions comes at a price: For the past three months, Solana has consistently surpassed Ethereum in decentralized exchange (DEX) transaction volume. As a result of this activity, fees and congestion have started to impact Solana’s user experience, prompting the creation of Solana Virtual Machine (SVM) blockchains. In short, Solana is following in Ethereum’s footsteps. 

Adoption at an all-time high: Solana’s adoption metrics are surging, with almost half of $TRUMP buyers being first-time Solana users, according to Chainalysis. This metric underscores Solana’s unique ability to capture attention and convert it into growth, as shown by the flurry of memecoins created on it with a market capitalization of nearly $20 billion.

$10 Billion in stablecoins and counting: Solana’s total stablecoin supply has reached a record high of $10 billion. This new peak underscores growing confidence in the network’s ability to support a robust, liquid ecosystem. 

What does this mean for Solana? Solana’s recent success isn’t just about isolated wins—it’s the culmination of its design philosophy: scalability, speed, and accessibility. While $SOL sits at a $113 billion market cap after last week’s ATH, the network is proving it can deliver on promises of low fees and high throughput at scale. The blockchain isn’t just back—it’s permanently establishing itself as a leader in innovation and adoption.

Trends

Trump’s first week: crypto moves

Donald Trump’s return to office has already made waves in the crypto world with actions that could redefine the landscape:

• Executive order on crypto: Trump established a federal crypto working group to explore a national digital asset stockpile, among other tasks. He also prohibited CBDC development, reaffirming his opposition to centralized digital currencies.  

• Market reaction: The order triggered $1.9 billion in inflows to crypto exchange-traded products (ETPs), signaling renewed institutional confidence.  

• SEC rule rescinded: The SEC rolled back a controversial crypto accounting rule, signaling a regulatory shift favoring the industry.

• Crypto task force: The SEC’s new Acting Chairman, Mark T. Uyeda emphasized the need for a clear and comprehensive crypto regulatory framework and formed a crypto task force, led by Commissioner Hester Peirce.

Trump’s early actions doubled down on hopes of a crypto-friendly administration, so we are curious to see what comes next.

Ethereum

Ethereum’s comeback strategy

Price-wise, Ethereum has been falling behind Bitcoin: the latter has surged 160% over the past year compared to Ether's 45% rise. One can argue that to counter this, Vitalik Buterin and the Ethereum Foundation are backing Etherealize, a Wall Street-focused startup led by ex-bond trader Vivek Raman. Etherealize aims to market Ethereum as the go-to blockchain for financial institutions, focusing on tokenization and institutional-grade solutions. Amid criticism for missed opportunities, Buterin has promised major changes to the foundation. With Etherealize and a renewed focus, where do you think Ethereum will get?

The tech age

New kid on the AI block

DeepSeek disrupted both AI and the markets this week after the Chinese OpenAI competitor released an open-source AI model which garnered significant attention for its cost-effectiveness and efficiency. Developed in just two months with a budget under $6 million, DeepSeek R1 performs comparably to leading models while utilizing fewer resources. This achievement has prompted U.S. investors to reassess their substantial expenditures on large data centers. Analysts suggest that DeepSeek's advancements could disrupt current AI investment trajectories and challenge existing market narratives regarding AI model training costs.

Macroeconomic roundup

Crucial macro week ahead

• Fed Interest Rate Decision (Wednesday): The Fed is expected to hold interest rates steady as it monitors economic conditions, with markets keenly focused on potential comments about President Trump’s push for rate cuts.
• FOMC Press Conference (Wednesday): Chair Powell's press conference will likely address the Fed's rate pause decision and could provide insight into how Trump's policy agenda may influence inflation expectations.
• ECB Interest Rate Decision (Thursday): The ECB is widely expected to cut the deposit rate by 25 basis points to 2.75%, reflecting slower eurozone growth and a more dovish stance.
• Initial Jobless Claims (Thursday): The data will give further insight into the strength of the U.S. labor market, which has recently shown robust job creation across sectors.
• ECB Press Conference (Thursday): ECB President Christine Lagarde’s remarks will be closely analyzed for additional details on the rate cut decision and evolving views on economic risks and tariffs.

The week’s most interesting data story

Cycle evolution

We love talking about the industry’s evolution so here’s a chart. Bitcoin’s evolution across market cycles shows a progression from explosive early adoption to more measured growth in recent years. Early cycles (Genesis to 2011  and 2011 to 2015) exhibit steep and dramatic price increases, reflecting Bitcoin’s infancy. Later cycles (2015 to 2018 and 2018 to 2022) show diminishing returns and lengthening durations, indicative of market maturation and adoption. The 2022 cycle so far reflects more tempered growth, possibly due to macroeconomic headwinds, regulatory scrutiny, and shifting investor priorities. This trend underscores Bitcoin’s transition from a speculative asset to a more stable, institutionalized store of value, increasingly influenced by global conditions.

As Douglas Adams wrote: “The history of every major galactic civilisation tends to pass through three distinct and recognisable phases, those of Survival, Enquiry and Sophistication.”

The numbers

Top 5 stats of the week

10,107 Bitcoin – MicroStrategy’s latest BTC acquisition, bringing the total stack to 471,107 BTC. 

19.03 – The CBOE Volatility Index (VIX), also known as the "fear gauge," surged 28% early Monday to 19.03 amid concerns about China's DeepSeek AI program disrupting market outlooks.

+630% – Bitcoin's price has surged 630% in the ongoing 2022 cycle, outperforming the 562% growth seen during the 2015-2018 cycle.

10 leveraged ETFs – Tuttle Capital has filed for this many 10 leveraged ETFs, including those linked to the $TRUMP and $MELANIA. 

832,000 – The number of active Solana addresses per hour, which is over 26 times higher than Ethereum.

Hot topics

What the community is discussing

Saylor follows them sats and SABs. 

Check the recap from our AMA session with CryptoRand.

Sen. Lummis caused quite a stir.

Dispatch is a weekly publication by Nexo, designed to help you navigate and take action in the evolving world of digital assets. To share your Dispatch suggestions and comments, email us at [email protected].