Solana’s derivative market is gaining significant traction and attracting traders globally, with its Open Interest (OI) hitting unprecedented levels amidst the ongoing battle between bulls and bears.
Following a strong bounce from a key support level, the main question now revolves around whether Solana can maintain its current momentum and aim for $264 or if prevailing bearish sentiment will push it lower.
Active market signals from high open interest
Solana’s derivative market witnessed a notable surge in activity during November, reaching record OI levels. This surge indicates increased trading interest and may suggest upcoming significant price fluctuations.
The rise in OI also indicates a rising level of trader confidence in Solana’s market movements.
Market sentiment hinted by funding rates
Despite the recent rally, the funding rates of SOL paint a different picture. Periods of positive and negative funding rates on the chart point to lingering uncertainties in the market.
Currently, bearish funding rates slightly outweigh bullish ones, potentially setting the stage for significant price movements as market participants adjust their strategies.
Market sentiment skewed towards short positions despite the recovery
Presently, the Long/Short Ratio for SOL stands at 0.89, indicating a prevailing bearish sentiment. Short positions constitute 52% of the market, underscoring doubts about the sustainability of the current upward trend.
Nevertheless, with SOL witnessing a rapid 10% recovery within 48 hours, it challenges these doubts and suggests that buyers are entering the market at key levels.
Source: Coinglass
Strong recovery of SOL from crucial support levels
Solana experienced a notable turnaround from a critical support area, sparking a swift rally that contradicts the prevailing sentiment dominated by short positions and showcases robust buyer confidence.
If this positive momentum endures, SOL might breach significant psychological and technical resistance at $240, potentially paving the way for a move towards $264.
The interplay between OI and dominant short positions sets the stage for heightened market volatility.
If buying pressure persists and shorts start to close their positions, a rally towards $264 could be in the cards.