Over the past month, Solana (SOL) has experienced a steady upward trend, but recent analysis suggests potential challenges in the near future.
As a result, CryptoCrypto has initiated an investigation to identify these obstacles and assess SOL’s readiness to confront them.
Challenges in Solana’s Liquidation Process
Data from CoinMarketCap indicates that bullish momentum has driven Solana’s price up by more than 34% in the last 30 days, leading to a significant increase in market capitalization to $106 billion.
Alphractal, a data analytics platform, recently shared insights on Solana via a tweet, revealing that in the short term, liquidations are expected to occur around the $247 to $252 range. However, there remains a notable number of unresolved long positions from the past month.
According to the tweet, concentrations of liquidations are observed at levels such as $210 and below $200, with a final pool of short positions near $267. This poses challenges for investors looking to go long at these levels, as increased liquidations often trigger price corrections.
Factors Contributing to SOL’s Decline
Notably, Solana has experienced a price correction of over 5% in the last 24 hours, with the current trading price at $224.94. The decline may be attributed to heightened selling pressure, as indicated by an increase in CEX inflows during the bullish price period, signaling profit-taking actions.
Considering Alphractal’s suggestion, the drop in SOL’s price to $210 could present a favorable reentry point for investors due to anticipated liquidations amid a bearish trend, potentially leading to a subsequent market recovery.
To explore the likelihood of SOL reaching $210 or experiencing a bullish resurgence before that, CryptoCrypto examined additional data sets. Coinglass data showed a decrease in Solana’s long/short ratio, indicating a rise in short positions and a growing bearish sentiment among traders.
An analysis of SOL’s daily chart suggests a high likelihood of the token reaching $210, following its recent dip below the $237 support level. The Relative Strength Index (RSI) displaying a downward trend further supports the possibility of SOL retracing to $210 amidst selling pressure.