Key Points:

• Solana’s price dropped 9.5%, reaching $30 million in liquidations.

• The contrasting bearish sentiment in futures CVD alongside rising funding rates hints that the long positions might have led to these corrections.

• Recent support at $180, combined with the recent Golden Cross, suggests that a bullish trend might still be in play.

On Wednesday, Solana (Sol) saw a decline of 9.5%, dropping from $205 to $186. This shift could be setting the stage for a bearish pattern on daily charts. When it fell below $190, it marked its largest daily drop since March 3rd, a time when Sol had plummeted over 20%.

An abrupt shift in Sol Futures unfolded as the long position worth $30 million faced liquidation. Open interest soared to an unprecedented $12 billion. Currently, prices remain 36% below their peak, yet the rise in open interest indicates traders could be cashing in on long positions.

Several key on-chain indicators pointed toward this correction. Nettaker volume displayed increased sales activity, and sellers appeared to be more aggressive. This change coincided with a drop in aggregated spot cumulative volume delta (CVD), which tracks the activity balance between buyers and sellers, suggesting that sellers could be reaching profitability near the $200 mark.

Interestingly, despite increasing prices, the aggregated futures CVD has been consistently declining, indicating that futures sellers are gradually expanding their positions.

In addition, the funding rates hit their highest point in the last quarter, signaling an overcrowded long trade. The combination of high funding and open interest created a prime situation for long positions, pressuring many traders to exit their positions.

Is this a sol dip to buy?

A sudden 9% drop in SOL might raise short-term alarms, but following a significant 56% rise in the last month, such pullbacks may actually be beneficial, offering a chance for a reset after rapid movements. On the technical front, daily charts appear promising, with $180 identified as a crucial support level for continued bullish momentum.

Earlier in the week, Sol seemed to establish a strong breakout by reclaiming its $180 position, marking a significant bullish shift since November 2024. The last notable crossover saw prices soar over 730% from October 2023 to March 2024.

A positive reaction around the $180 level can enhance bullish sentiment. However, if this support falters, it might pave the way for a deeper correction to the $168-$157 area, aligning with previous market imbalances and Fibonacci retracement levels of 0.5 to 0.618.

This article does not provide investment advice or recommendations. All trading activities carry risks, and readers should conduct their own research before making decisions.