Simply put
- Approximately 80% of Solana’s circulating supply is currently at a loss, heightening the risk of panic selling.
- If Solana drops below $124.40, it may trigger the liquidation of a long position worth $239 million.
- Despite ongoing challenges, the Spot Solana ETF has seen $719 million in inflows without any outflows since its inception.
Solana, along with other major altcoins, is under significant stress due to a prolonged decline in the cryptocurrency market.
A recent report indicates that nearly 80% of Solana’s circulating supply is in the red. This analysis from the on-chain market intelligence platform Glassnode suggests a very top-heavy market structure before the current downturn.
“When a large majority of holders are experiencing losses, the risk of a panic selling wave increases,” commented Ilya Otichenko, chief analyst at CEX.IO. Investors trying to recover might opt to sell if prices continue to drop, he added, pointing out a significant liquidation zone that could quickly drive prices downward.
Data from CoinGlass shows that about $239 million in long positions could be forced to close if Solana falls below $124.40.
As per CoinGecko, Solana has decreased by 0.3% over the past day and is now trading at $129.24. On prediction markets, users estimate only a 4% chance that Solana will reach a new all-time high by the end of the year.
“We see any major liquidation as a necessary cleanse in the market, setting up for the next phase of accumulation,” noted Lawrence Samantha, CEO of NOBI, a crypto asset management platform.
Otichenko added that challenges for finance companies tied to Solana are making the situation even tougher, with the average mNAV significantly low at about 0.6. Further declines may lead to asset sales to cover costs, pushing bearish sentiments and escalating fear-driven decisions.
Cryptocurrency market outlook
Even with the continued downturn, a weekend rebound has slightly improved the outlook for the crypto market. Upcoming macro events, such as the end of quantitative tightening and important Fed interest rate decisions scheduled for December, might bring volatility that could aid recovery, especially if the macro outlook lacks hawkish comments.
Data from SoSoValue indicates that the Spot Solana ETF has not seen a single negative outflow since it launched about a month ago, attracting roughly $719 million in net inflows.
“We’re not cutting our positions; we are here to hold,” NOBI analysts explained, suggesting only a fundamental failure should trigger a loss exit strategy.
When asked about Bitcoin’s status, NOBI analysts noted that while it isn’t at its bottom yet, the conditions are showing potential for upward movement. They cautioned that claiming a bottom is forming may be premature, with the possibility of further market resets before entering a new cycle.
Prices could still dip if broader market conditions stay weak or if a new round of liquidations occurs. Typically, the real bottom appears when volatility diminishes, leverage resets, and long-term buyers quietly begin to accumulate again.
