Key Insights:
- Solana’s key support at $125 remains crucial, a breakdown could trigger a drop to $58.
- A $140 surge could liquidate $69M in shorts, fueling a potential short squeeze.
- With bearish momentum rising, SOL’s derivatives market sees declining open interest.
Solana price is at a crucial level, with $125 acting as strong support. A breakdown below this level could push Solana toward $58 as bearish momentum intensifies. However, if Solana surges to $140, it could trigger a short squeeze, liquidating $69 million in shorts and fueling further gains.
Solana Price Faces Bearish Pressure Below Key Support
Solana price is struggling to maintain stability above the critical $125 level. Crypto analyst, Ali Martinez noted that a failure to hold this support could result in a sharp drop toward $58. The top altcoin’s price is currently facing bearish pressure, with declining open interest in Solana’s derivatives market signaling reduced trader confidence.
On-chain data shows weakening buy pressure, with traders adopting a cautious stance. The decline in Solana price open interest suggests fewer long positions, making it easier for bears to push the price lower. If the selling pressure continues, a breakdown below $125 could trigger a significant liquidation event, accelerating losses.
Short Squeeze Potential as Solana Price Approaches $140
Despite the bearish outlook, Solana price has a chance to regain bullish momentum. Ali Martinez highlighted that if Solana rises toward $140, it could liquidate $69 million in short positions. This could lead to a short squeeze, forcing investors to cover their positions and pushing the top altcoin’s price higher.
A short squeeze happens when traders betting against an asset are forced to buy back at higher prices, increasing demand. If Solana price surpasses $140, it could gain further momentum, invalidating the bearish scenario. Strong buyer interest at this level could push Solana past key resistance zones, signaling renewed bullish strength.
Solana’s Derivatives Market Signals Caution
Solana’s derivatives market data reflects uncertainty among traders, with open interest declining. Lower open interest indicates that people are closing out positions instead of opening them. This indicates that the buyers and sellers of this market are anticipating a clearer signal before they can open new long or short positions in the Solana price trend.
Liquidation data also bear a similar sentiment, account of which results in a lesser number of long positions being opened aggressively. An important level that may have been of interest to traders is $125, as its break means deeper losses.
Solana Price Outlook Hinges on Key Levels
Meanwhile, Coinvo’s chart further highlighted Solana’s key support zone between $115 and $130. This area has been held multiple times and has effectively acted as a strong demand level. SOL is currently testing this zone after a steep correction from its April 2024 high. Bulls must hold this level to avoid the loss of further ground.
A breakdown at $115 will lead to Solana price dropping 22% of its value to settle at $90. Further bearish pressure may pull SOL as low as $58, a previous support area. However, the high-lows pattern also gives a series of lower highs, which indicates diminishing bullish pressure or momentum.
Disclaimer
In this article, the views and opinions stated by the author or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
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