Over the weekend, Solana [SOL] witnessed volatile price movements. After experiencing a 7.22% decline in the past week, the token dropped an additional 3.22% in the last 24 hours, settling at $235.
The recent downward trend hinted at market fatigue, with buyers taking a step back to await clearer signals.
While some view the retreat as a standard correction, others caution that it might signal the start of a more significant decline.
SOL Achieves Low Leverage Liquidity, Targets Key Level
According to Hyblock, SOL seems to be in a phase of low-leverage liquidity as its price continues to decline on the charts.
This behavior often indicates that SOL is purging low-leverage liquidity levels, potentially paving the way for an upward momentum.
If this scenario unfolds, Hyblock’s analysis suggests that the next significant target for SOL is above $249, where a substantial liquidity cluster could ignite a price surge.
Nonetheless, the future outlook remains uncertain. Various market indicators are sending mixed messages—some hinting at further declines, while others suggesting that SOL might be gearing up for a recovery.
Heavy Selling Pressure in the Market—Is it a Temporary Pullback?
On-chain data reveals a surge in selling activities, accompanied by a decline in price and trading volume. Trading volume has decreased by 9.75%, now at $3.72 billion.
Coinglass’s Long-to-Short Liquidation model indicates a bearish stance in the derivatives market, with short contracts outnumbering long contracts significantly.
As this ratio moves further below 1, short positions become more dominant.
This sentiment is mirrored in liquidation figures from the past 24 hours, with $6.4 million in long positions liquidated compared to only $348,600 in short liquidations.
The notable imbalance underscores a market leaning towards bearish momentum.
With these dynamics at play, SOL faces the risk of further declines as pessimism outweighs any hints of a potential recovery.
Bullish Activity Emerges Amid Market Volatility
Despite recent bearish sentiments, bullish activities have surfaced, as evidenced by a 2.89% increase in Open Interest, reaching $5.28 billion.
Open Interest reflects the volume of unresolved derivative contracts in the market. A rise typically indicates renewed trader confidence, hinting at a market ripe for a potential upturn.
Furthermore, Exchange Netflow data shows a shift favoring bulls, with substantial liquidity, mainly SOL, moving from exchanges to private wallets.
This outflow creates a possible supply constraint, exerting upward pressure on prices and increasing the chances of a rally, potentially turning the current drop into a temporary retracement.