Sonic erased a staggering $1.3 billion in market value due to financial difficulties or disappointing sales performance.
Financial turbulence strikes again as Andre Cronje's Sonic token plummets, shedding about $1.3 billion in market cap since its recent restart in January. The Sonic token took a nosedive on Sunday, hitting $0.3775 – down by an eye-watering 61% from its yearly peak. This nose dive has brought its market cap to $1.9 billion, a stark contrast from its peak of $3.15 billion in January.
The Sonic ecosystem has hit the brakes, and the hard numbers don't lie. Data tells us that the stablecoin market cap has taken a nose dive too, dropping to $446 million from $597 million earlier this year. A shrinking stablecoin supply is like a canary in a coal mine, warning that the network's activity is going nowhere fast.
Let's take a peek at the weekly chart that's more fitting for a rollercoaster ride. Sonic's total value locked in DeFi has slid from nearly $2 billion in May to $1.53 billion. Most of this slide can be blamed on outflows from AAVE, Sio Finance, Pendle, and MEV Capital, which have thinned out by over 10% in the last 30 days.
Clearly, Sonic is making less green these days compared to a few months ago. Its daily chain revenue dropped to $9,600 on Saturday from a record high of over $42,000 in May. Ouch!
Not only that, but the funding rate across all exchanges has been in the red for the past few months. Santiment data shows that the funding rate hit rock bottom at 0.05% on Saturday, its lowest in over a week. Lower funding rates suggest that investors are betting on a price drop in the future.
The Sonic crypto price technical analysis
The 12-hour chart tells us a tale of falling prices. The S price has been like a runaway train, hurtling downhill in the past few weeks. It hit a new low of $0.3810, a crucial level that lines up with the lowest swing in April. This key level was also the neckline of a double-top pattern at $0.6185.
A double-top is like a red flag in a bear market. Sellers are now eyeing the support all-time low of $0.3151, its lowest point in February. With the 50-period moving average keeping the token down and oscillators pointing south, things don't look too promising for Sonic at the moment.
Cardano price is heading south due to weak network activity
While the focus has been on Sonic, let's briefly touch on Cardano's struggle. With weak network activity, Cardano's price is also showing signs of a downward spiral.
[Insights]The steep decline in Sonic's market capitalization and price since its relaunch in January can be attributed to several key factors:
- Ecosystem Slowing Down: The slowdown in Sonic's ecosystem has significantly impacted the token's value, as reflected in the stablecoin market cap plunging to $446 million from $597 million.[2]
- End of Partnership: The abrupt termination of Sonic's five-year partnership with the market-making firm Wintermute on May 15 triggered a series of large token dumps, adding to the downward pressure on the token.[4]
- Market Instability and Manipulation Concerns: Broader market instability and fears of price manipulation have fueled the downward trend. The token's price has been volatile, with sharp drops in short periods, such as a 14% decline in just a week.[4]
- Whale Activity: Whale activity, including large token dumps, has only made the situation worse. Top wallets offloading tokens have led to significant drops, like the token falling over 8% in a day and 14% in a week.[4]
- Bearish Market Sentiment: The overall market sentiment remains bearish, with predictions pointing to further price decreases. The Fear & Greed Index shows a level of greed, but the sentiment remains negative, contributing to the bearish outlook.[1][5]
These factors combined have led to a substantial decline in Sonic's market capitalization and price since its relaunch in January.
- The current state of Sonic's ecosystem mirrors a slowing down, with the stablecoin market cap plummeting from $597 million to $446 million, indicative of a shrinking network activity.
- The termination of Sonic's five-year partnership with Wintermute on May 15, resulting in large token dumps, contributed to the downward pressure on the token.
- Broader market instability, fears of price manipulation, and the token's volatile nature, characterized by sharp drops in short periods, have intensified the downward trend in Sonic's price.
- Whale activity, such as large token dumps from top wallets, has exacerbated the downward spiral, with the token experiencing significant drops like an 8% decline in a day and 14% in a week.
- Despite a somewhat positive sentiment as indicated by the Fear & Greed Index, the overall market remains bearish, contributing to the persistent bearish outlook for Sonic and similar cryptocurrencies.
