Solana is down more than 6% on Monday, putting pressure on the support area of $174-177 and a local support line.
Retail interest in Solana is low as open interest in futures and funding rates decline.
Positive spot market flows and positive weekly flows for SOL exchange-traded funds from last week raise hopes for a recovery.
The price of Solana ($SOL ) is down over 6% at the time of this report on Monday, putting pressure on the support area of $174-177 after the reversal from the 200-day exponential moving average. Derivative data indicates a bearish bias among traders expecting further losses.
However, the outflows from the spot market and the inflows last week into Solana exchange-traded funds in the United States keep the recovery opportunities alive.
Sellers dominate SOL derivatives
Solana is losing retail interest as broader market volatility dampens traders' risk appetite. CoinGlass data shows that the open interest in futures contracts $SOL has decreased by 1.56% over the past 24 hours to $10.16 billion, indicating a drop in the leverage of open futures or traders closing their positions.
Additionally, the weighted funding rate with open interest is -0.0078%, indicating a downward bias among traders, who are paying a premium to hold short positions.
On a more negative note, the liquidation of long positions worth $43.10 million over the past 24 hours outweighs the liquidation of short positions at $1.90 million, indicating a larger unwinding of traders aligned with the bullish trend. This imbalance has led to a drop in the active long/short position ratio to 0.9102 in the same timeframe, suggesting a greater number of active short positions.
SOL derivatives data. Source: CoinGlass.
Solana risks collapsing below key support elements
Solana is trading at $174 at the time of this report on Monday, following a daily loss of over 6%, exposing the demand area of $174-177 and a support line formed by connecting the lows of July 1 and October 10.
A decisive close below $174 will confirm the breakdown, exposing the market to further declines to the support area of $153-156, reflecting a drop of about 10% from the current market price.
Furthermore, Solana is trading below the 200-day exponential moving average, while the decline in the 50-day and 100-day exponential moving averages indicates the risk of a 'death cross' pattern. This will trigger a sell signal with increasing short-term bearish momentum.
Momentum indicators on the daily chart indicate an impending bearish shift as the Moving Average Convergence Divergence (MACD) converges with the signal line. If the MACD continues to decline below the signal line, it will confirm increasing bearish momentum.
At the same time, the Relative Strength Index (RSI) at 37 shows a sharp downward move, indicating increased selling pressure. The additional space on the downside, before reaching the oversold area, suggests further room for correction.
The daily chart for SOL/USDT.
On the other hand, a rebound in $SOL from $175 may retest the 200-day exponential moving average at $187.
Can Solana trap the bears?
Despite the decline in retail demand keeping SOL on the edge, the launch of Solana exchange-traded funds in the United States last week shows steady institutional demand for Ethereum's main competitor. Sosovalue data shows positive flows for four consecutive days last week, totaling $199.21 million for the week ending October 31. If this steady trend continues this week, demand from institutional players could drive up SOL prices.
Flows of Solana exchange-traded funds in the United States. Source: Sosovalue.
Additionally, the net flows during the day in the spot market show a net inflow of $75.76 million from Solana so far on Monday. This indicates that traders are either taking advantage of the discounted prices or moving tokens from exchanges to cold storage, reflecting confidence in Solana.
Net SOL spot flows. Source: CoinGlass.
In summary, Solana stands at a crossroads amid intense broader market volatility, which could shake traders on both sides of the bet. To avoid short-term losses, traders may consider waiting for a decisive daily close before opening a short position.
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