As Solana (SOL) hovers around $83.69, it appears to be recovering slightly from a low of $79.82 earlier in the day, marking a modest increase of 1.5% in the last 24 hours. Currently, SOL boasts a trading volume exceeding $3.25 billion and a market capitalization of approximately $47.57 billion.
Despite this uptick, the broader trend remains bearish, with SOL trading well below essential moving averages—namely, the 50-day exponential moving average (EMA) at $106.66 and the 100-day EMA at $124.18. This technical landscape suggests that sellers are still in control, and a significant resistance area exists between $90 and $100.
Market participants expect any attempts to rally into this resistance zone will likely encounter sellers, necessitating a break above the 50-day EMA to signal a genuine shift in momentum. Conversely, should SOL fall below the $78 threshold, it could head towards the psychological support level of $75, indicating a critical juncture for traders.
Short Squeeze Setup
The derivatives market has recently witnessed a significant drop in funding rates into negative territory, reflecting a heavy influx of short positions against SOL. When such extreme shorting occurs, it sets the stage for potential price spikes, as a sharp upward movement can incite short traders to cover their positions, resulting in a short squeeze.
Historical trends have shown that instances of negative funding rates have often coincided with local price bottoms for SOL. A rally beyond the $90 mark with robust trading volume could heighten the likelihood of a short squeeze reaching toward the $100 level.
Network Activity Diverges From Price
Remarkably, Solana’s on-chain data indicates a steady rise in new wallet creation, even amid declining prices. This apparent divergence between user adoption and pricing typically signifies accumulation phases in previous market cycles.
Furthermore, Solana’s social dominance has decreased since its September peak, illustrating that discussions surrounding the token relative to other cryptocurrencies have diminished. This reduced hype, often perceived negatively, can indicate the exit of short-term traders and precede a period of accumulation.
While the True Strength Index remains below zero, indicating bearish momentum—with the main line at -33 and the signal line at -35—there are signs of cooling selling pressure as the lines start to flatten.
Analyst curb.sol observes the $75–$90 range as critical for potential consolidation, suggesting that a breakout above $90 might target $120 in the near future. As it stands, SOL remains at $83.69, on the cusp of critical technical levels.
With the market dynamics shifting and the potential for a short squeeze in play, all eyes will be on Solana as traders navigate this challenging terrain.
