A dovish statement from Federal Reserve Governor Waller is injecting new liquidity expectations into the crypto market. The popular candidate for the next Federal Reserve Chair bluntly stated, 'The job market is weak, and there is room for rate cuts,' instantly igniting market risk appetite.
Meanwhile, the on-chain activity of the Solana network is exceptionally active, with daily trading volumes nearing 67 million transactions, setting a new high in 11 months. However, prices still fluctuate around $123; what does this divergence between fundamentals and prices imply?
01 Macroeconomic winds are coming, liquidity tides are about to turn
The Federal Reserve's shift in monetary policy has become increasingly clear. Waller's remarks not only emphasize the necessity of continuing rate cuts but also commit to maintaining the Federal Reserve's independence, alleviating market concerns about political interference in monetary policy.
Historical data shows that rate-cutting cycles are often 'performance time' for crypto assets. When interest rates in traditional financial markets decline, funds seeking higher returns begin to flow into the high-risk, high-reward crypto market.
Currently, the market expects the Federal Reserve to possibly continue cutting rates by 25 basis points in the upcoming meetings, and this expectation has already boosted the risk appetite across the entire cryptocurrency market. For assets like Solana with a high beta value, a loose liquidity environment often leads to more significant price increases.
02 On-chain data reveals divergence, is SOL poised to take off?
Despite the lackluster price performance, the on-chain activity of the Solana network is exceptionally active. Daily trading volume has reached 67.77 million transactions, setting a record high in nearly 11 months.
Meanwhile, the SOL reserves at the exchange are continuously flowing out. Over $264 million worth of SOL has been withdrawn from the exchange in the past 96 hours, with $46.26 million flowing out in just the last 24 hours. This outflow trend suggests that investors may be transferring their assets to long-term storage wallets, indicating a potential increase in holding willingness.
However, derivative data reveals a hint of concern. The funding rate for SOL perpetual contracts has recently turned negative, marking the first occurrence in the past 6 weeks. A negative funding rate indicates that derivative traders are paying fees to maintain short positions, reflecting a prevailing bearish sentiment in the short term.
03 Technical analysis, key positions fully revealed
From a technical analysis perspective, SOL is at a critical juncture. The area around $123 is not only a psychological support level but also a demand zone that has been tested multiple times recently.
On the upside, the $130-$132 area constitutes the first resistance level. This position gathers the 20-day and 50-day moving averages, as well as the previous supply zone. If this area can be effectively broken, the next target is around $142, with more significant resistance at $147.
Notably, the open interest in SOL has decreased during the price decline, indicating that the market is closing positions rather than establishing new short positions. This reset of leverage often lays the groundwork for the formation of subsequent trends.
From a broader perspective, SOL needs to break through and stay above the 200-day moving average (approximately $144) to confirm the return of a medium-term upward trend.
04 Institutional layouts quietly unfold, ETF funds continue to flow in
Although retail investors may hesitate due to short-term price fluctuations, institutional funds are continuously positioning SOL through ETF channels. The Bitwise Solana ETF has attracted over $527 million in net inflows since its launch.
The first Solana staking ETF (BSOL) has been listed on the New York Stock Exchange, marking Solana as the third cryptocurrency asset to have a U.S. spot ETF after Bitcoin and Ethereum. This milestone event brings a broader institutional investor base to SOL.
The Hong Kong Securities and Futures Commission has approved the Solana spot ETF, becoming the first product of its kind in Asia, which is expected to accelerate the U.S. SEC’s approval process for similar products. Once the U.S. SEC approves the Solana ETF, it will become an important bullish catalyst.
05 Comprehensive comparison of long and short factors, current market sentiment analysis
The following is a comparison of bullish and bearish factors in the SOL market:
Bullish factors Bearish factors Increased expectations for Federal Reserve rate cuts Negative funding rate for derivatives On-chain trading volume hits an 11-month high Short-term moving averages show a bearish arrangement Continuous outflow of SOL from exchanges Futures trading volume decreases by 3% Institutions continue to flow into ETFs Total locked value (TVL) declines Network upgrade enhances technological advantages Overall cryptocurrency market risk appetite retreats Market sentiment is currently neutral, with the fear and greed index rising from a low position to the neutral zone at 50. This shift in sentiment indicates that investors have fully anticipated short-term fluctuations and are paying more attention to long-term fundamental factors.
06 Operational strategy: Layout plans for different risk preferences
For aggressive investors, consider lightly entering long positions around $123, placing stop losses below $115. If prices break through the $132 resistance level, consider increasing positions, targeting the $142-$147 area.
For conservative investors, it is recommended to wait for clearer signals. One is for prices to break through $132 with significant volume and hold steady, and the other is for on-chain data to show clear improvement, such as a positive funding rate and increasing trading volume. Only when these conditions are met is it a safer entry point.
For long-term investors, the fundamentals of SOL remain solid. The network upgrade has reduced transaction confirmation times from 12 seconds to 100-150 milliseconds, with throughput increased to 107,000 TPS. These technical improvements provide support for long-term value.
SOL is currently at a critical decision point. There is strong support at $120 below, while it faces resistance in the $130-$132 area above. This narrow range of fluctuations is unlikely to last long; once broken, it could trigger significant volatility.
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