Solana crashed to a vital support level last week as sentiment in the crypto worsened and liquidations jumped.
Summary
- Solana has wiped out billions in value this month, with over $400 million in bullish positions liquidated as investors pull back.
- Still, inflows into the new REX-Osprey SOL + Staking ETF and the upcoming Alpenglow network upgrade offer potential catalysts for a rebound, setting the stage for a possible retest of $250 if the token can hold key support levels.
SOL crashes as liquidations jump
Solana (SOL) token plummeted to a low of $192, down by 20% from its highest level this month, erasing billions of dollars in value.
CoinGlass data shows that Solana bulls suffered substantial liquidations during this crash. Most of these liquidations occurred last Monday, when they jumped to over $250 million.
Solana positions worth $82 million were liquidated on Friday, bringing the cumulative weekly figure to over $400 million. Liquidations of bullish trades are a bearish catalyst because it means that exchanges are shutting down bullish positions.
The surge in liquidations coincided with the substantial decline in the futures open interest. Data shows that the open interest dropped to $13.4 billion on Sunday, down from the monthly high of $17.1 billion. Falling open interest is a sign that investors are staying in the sidelines during this crash.
Still, Solana has some bullish catalysts that may drive it higher in the coming weeks. The first one is the recently launched REX-Osprey SOL + Staking ETF (SSK), which continues to experience inflows, a sign of robust demand. It now holds about $301 million in assets, making it one of the biggest altcoin ETFs.
In line with this, Solana will benefit when the Securities and Exchange Commission approves the multiple spot SOL ETFs that companies like Canary and Grayscale have filed. SSK’s performance is a sign that investors are still interested in the coin.
Additionally, Solana’s Alpenglow upgrade is scheduled for release in the coming months, which may enhance its performance. This upgrade will introduce new features in the network, including faster speeds and a transition from the proof-of-authority architecture to proof-of-staking.
Solana price technical analysis
The daily timeframe chart shows that the Solana price crashed and bottomed at $191 last week. This was a significant level as it coincided with the bottom of the trading range of the Murrey Math Lines and the 38.2% Fibonacci Retracement level.
The decline also coincided with the 100-day Exponential Moving Average. Therefore, it is likely that the SOL price will bounce back and possibly retest the psychological level at $250. Such a move would imply a 26% upside from the current level.
A drop below the ascending trendline that links the lowest swings since June will invalidate the bullish Solana price forecast.
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