Will Solana Price Hold 18% Gains As $25M Liquidations Raise Concerns

by

As a seasoned crypto investor with battle scars from numerous market cycles, I find myself cautiously optimistic about Solana’s recent price surge. While the 18% jump is undeniably encouraging, my years of experience have taught me to tread carefully when sentiment improves slightly amid broader market turmoil.

Solana’s price experienced a significant jump of approximately 18%, reaching close to $140, as it encountered potential resistance. This upward trend occurred during a broader market recovery following Monday’s turmoil. Although investor sentiment has shown slight improvement, it remains uncertain whether this change is substantial enough to maintain the price hike, given ongoing worries about liquidations in the futures market.

Solana Price Recovery Threatened

The decline in Solana’s price began on July 29 as the smart contracts token halted at $193 across multiple trading platforms. Besides the Federal Reserve’s decision to keep interest rates steady, disappointing employment figures and rumors of a potential recession in the U.S. contributed to the widespread selling.

The escalating conflicts in Western Asia have market participants, including those in crypto, on high alert due to concerns about a potential downturn. As such, there’s growing interest in a comprehensive analysis of SOL price trends – determining whether the upward momentum will continue towards $200 or if we might see a correction down to $100 instead.

On Tuesday within U.S. trading hours, Solana’s price was traded at approximately $137 on Binance. After recovering from a long candle wick that dipped to $110, the buyers managed to push past a minor obstacle at $130, but they halted their advance at $140.

A boost in the Relative Strength Index (RSI) from an oversold state prompted traders to consider buying Solana (SOL). If the RSI continues its path above the central line within the neutral zone, Solana may experience a surge over $140, potentially triggering further rallies towards resistance levels at $150 and $160 where significant selling activity has previously occurred.

In simpler terms, if you follow the market trends, bulls (investors expecting a rise in prices) are aiming to push the Solana price above the thin, downward-sloping trend line for confirmation of a strong uptrend and to boost the likelihood of the rally continuing.

Will Solana Price Hold 18% Gains As $25M Liquidations Raise Concerns

In my crypto journey as an investor, I’ve noticed that Solana (SOL) seems to be facing a hurdle in its immediate upward momentum due to the influence of the 200-day Exponential Moving Average (EMA). This creates a challenging scenario for the bulls, as they strive for growth. As the price hovers, I foresee a potential correction dipping below $140. This decrease in value could potentially sweep through the support levels at $130 and $120, increasing the likelihood of encountering significant liquidity there.

$25 Million SOL Futures Liquidated

On Monday, liquidation events intensified, putting stress on sellers and causing the market to cool down even more. As per Coinglass’s statistics, over $1.1 billion in both long and short positions were liquidated on that day.

Consequently, the rise in SOL‘s price on Tuesday led to a significant number of investors being forced out of their positions, with long and short positions amounting to over $25 million collectively.

Will Solana Price Hold 18% Gains As $25M Liquidations Raise Concerns

It’s important to understand that when more traders are forced to sell their holdings of Solana due to future contracts expiring (liquidations), it can lead to a decrease in the Solana price. Furthermore, these compulsory sales from liquidated positions can intensify market drops, potentially causing further price drops and increased market volatility.

As a crypto investor, I found myself in an intriguing predicament yesterday: Open interest surged unexpectedly by 22% within a single day, yet the trading volume remained relatively subdued. This unusual scenario might suggest hesitation among investors and a lack of strong convictions in the market, hinting that they are not fully committed to their positions.

Read More

2024-08-06 17:04