Most altcoins have crashed by double digits in the past few weeks. Solana, Bonk, Pepe, and Raydium prices have plunged by double digits, meaning that they have moved into a deep bear market. So, let’s explore why these altcoins have plunged and what to expect in the near term.
Why Solana, Bonk, Pepe, and Raydium have crashed
Solana price has plunged from near $300 in January to $167 today, costing investors billions of dollars. Similarly, Bonk, the biggest meme coin in the Solana ecosystem, has fallen by 75% from last year’s high of $0.000060 to $0.00001528.
Pepe coin, another popular meme coin, has crashed from $0.00002828 to $0.0000092, while Raydium (RAY) is down by over 40%. Other altcoins have plunged in the past few months.
Bitcoin price weakness
These altcoins have plunged because of the ongoing weakness of Bitcoin price. BTC has plunged from the all-time high of $109,200 in January to about $95,000 today. In most cases, altcoins usually crash hard when the price of Bitcoin falls, and vice versa.
On the positive side, the ongoing Bitcoin retreat is part of the formation of a bullish flag pattern on the weekly chart. It is also forming a megaphone pattern on the daily chart, a sign that the BTC price will explode higher in the coming months.
Bitcoin has some bullish catalysts. First, there are elevated hopes that Donald Trump will agree to a Strategic Bitcoin Reserve later this year. The pros and cons of having such a reserve are being evaluated by David Sacks, who is the crypto and AI czar.
Second, Bitcoin ETF inflows are still strong and currently stand at over $41 billion. There are chances that these flows will get to $50 billion this year.
Third, Bitcoin supply remains under pressure because of the growing mining difficulty and falling reserves in exchanges.
Solana ecosystem challenges
The Solana, Bonk, and Raydium prices have plunged because of the ongoing concerns about the Solana ecosystem.
Solana has become the most popular blockchain for launching meme coins, especially after the Pump.fun launch. Data on its website shows that thousands of new meme coins are being created today.
That has led to major rug pulls that have cost investors billions of dollars. Three key examples of this are Official Trump, Melania, and Libra. All these tokens surged after their launch, attracting millions of traders. They then crashed, costing these novice traders billions and making insiders a lot of money.
Therefore, the implication is that Solana will be known as the blockchain network for scams. Volume handled in its ecosystem will likely continue falling over time. Data shows that Solana’s DEX volume has crashed by 20% in the last seven days.
Federal Reserve and tariffs
Solana and other altcoins like Bonk, Raydium, and Pepe have also crashed because of the actions by the Federal Reserve. The bank decided to leave interest rates unchanged at 4.50% in the year’s first meeting.
Officials have hinted that the bank will not be in a hurry to slash interest rates this year because of the elevated inflation. Data released this month showed that the headline consumer price index (CPI) rose to 3.0% in January, the highest level in months. Core inflation has remained above 3%.
US inflation may keep rising, forcing the Federal Reserve to hike interest rates because of the upcoming Trump tariffs. Trump has already imposed a 10% tariff on Chinese goods, and he will add a 25% levy on Mexican and Canadian goods. Altcoin prices often crash when the Fed has a highly hawkish tone.
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