As the United States gears up for a pivotal election, the cryptocurrency market is on high alert for potential disruptions that could impact major tokens such as Bitcoin and Solana. With the political climate poised for change, investors are seeking strategic approaches to weather the storm. Markus Thielen, leading 10X Research, has introduced a tactical “pair trade” strategy: adopting a long position on Bitcoin (BTC) and a short position on Solana (SOL). This maneuver is informed by recent trends in Solana’s network activity and anticipated regulatory shifts in the post-election landscape.
Reasons for Shorting Solana
Solana, renowned for its high-speed blockchain technology, has recently exhibited some concerning signals. The network’s transaction fees have significantly decreased, plummeting from $5 million in late October to $2.5 million. For investors, this decline suggests a decrease in demand, a historical precursor to potential price drops. The cooling off in fees is seen by 10X Research as a bearish indicator, prompting a short position on SOL in the near term.
Potential Election Outcomes and Market Impact
The upcoming election could exert a profound influence on the cryptocurrency market. According to Thielen, a victory for Kamala Harris might reduce the likelihood of U.S.-based ETFs associated with alternative assets like Solana gaining approval. This scenario could precipitate a substantial drop of up to 15% for SOL. Conversely, Bitcoin, due to its established status, might experience a more modest dip of around 9%.
On the other hand, if Donald Trump secures the presidency, the market outlook shifts. A Trump administration is generally perceived as more crypto-friendly, potentially fostering optimism and driving a 5% increase in assets like SOL, BTC, and Ether (ETH). With Bitcoin and Ether already having spot ETFs in the U.S., these assets could benefit further from Trump’s regulatory stance. Solana, however, lacks a spot ETF, although key players such as VanEck and 21Shares are eager for approval.
Strategic Considerations as Election Day Approaches
With the presidential race becoming increasingly competitive, the long BTC-short SOL pair trade could serve as a prudent strategy to mitigate uncertainties. The current SOL-BTC trading ratio stands at 0.00235, reflecting investor caution as Election Day nears. Ultimately, the market’s direction, whether favoring Bitcoin or Solana, will largely hinge on the White House’s future occupant and their stance on cryptocurrency regulations.
Current Solana Price Dynamics
The Solana (SOL) price is currently navigating a phase of uncertainty, hovering around the $160 horizontal support level, which previously served as resistance. Despite a bullish weekly chart, daily indicators are pointing to bearish trends. The MACD has crossed into bearish territory, and the RSI is at risk of falling below 50. Should this occur, SOL could descend to the ascending support trend line at $150.
A decline to this level would suggest that the recent breakout above $160 was merely a temporary deviation, implying that the overall upward movement might be corrective. Although SOL has rebounded at $160, a further dip to $150 is plausible.
