After being rejected at $93, Solana (SOL) saw significant downward pressure. As a result, the altcoin failed to hold the $90 support level, falling to a low of $88.
In fact, at press time, SOL was trading at $88.2, down 4.5%, signaling the risk of a market collapse. Amid this weakened structure, some market analysts have become extremely bearish.
One analyst projected the likelihood of a major crash, citing an earlier pattern. According to the analyst, SOL formed a bearish flag and the last time the structure formed, SOL crashed 56% to $67.
Once again, the same pattern forms, positioning the market for a significant price decline. A breakdown here, with the trend fully forming, could see SOL fall from $40 to $45, according to the analyst.
Why is Solana in decline?
Solana mostly fell as derivatives traders reversed their bearish positions and closed aggressively.
Data from CoinGlass shows that futures outflows soared to $2.13 billion, while inflows fell to $2.02 billion, at the time of writing. As a result, the net flow became negative again, plunging 547% to -$103 million.
At the same time, the altcoin’s open interest fell 2% to $5 billion, while the liquidation exceeded $8 million, with $6 million of long positions liquidated.
With the market in decline, traders reduced their positions, while others closed their positions, exiting the market altogether. This was a clear bearish sign. Historically, such market sentiments have led to a market downturn, followed by a significant price decline if it is prolonged.
In fact, the altcoin’s Future Grand Trend indicator has signaled a potential market decline. According to the directional indicator, SOL could fall by $75, with $57 being the most bearish case.
At the same time, the ADX indicator also showed this trend weakness, with the DMI approaching a bearish crossover. A bearish crossover here will validate the weakness of the trend.
ETFs offer the market a lifeline
While investors in the futures market have withdrawn significant amounts from the market during the liquidation of long positions, ETFs continue to experience inflows.
Over the past few days, SOL spot ETFs have avoided net outflows, with one session breaking even. According to Sosovalue data, they recorded $4.5 million in net income.
Although ETFs have failed to record consistent inflows, they have also avoided any selling activity, thereby reducing potential selling pressure.
Along with this, Spot Netflow also remained negative, falling to -$35.5 million, the lowest level seen in almost two months. This indicates increased accumulation in spot, with some taking advantage of the decline as a buying opportunity.
Therefore, if spot demand continues, especially from ETFs, the altcoin could avoid a significant decline and likely fall to $85 before rebounding to $93.
Final Summary
- Solana fell 4.5%, breaking through the $90 support and falling to $88 amid increasing bearish pressure.
- One analyst reported an extreme decline, predicting a drop to between $40 and $45 amid a bearish flag forming.
