Solana drops to $83 as longs get wiped out – Is $80 next for SOL?

Solana is on a strong bearish streak.

SOL has closed at lower lows for 6 consecutive days. In fact, the altcoin dropped to a low of $83, erasing all of May’s gains, reflecting strong downward momentum.

As of this writing, Solana [SOL] traded at $84, down 2.2%, adding to its 10% weekly decline. With the altcoin experiencing strong downward momentum, investors in futures have either closed positions or been forced out of the market entirely. 

Solana faces extreme deleveraging amid intense bearish pressure

With Solana [SOL] dropping to almost a three-week low, liquidation levels, especially for long positions, have skyrocketed. 

According to CoinGlass data, $27.3 million worth of Long positions were liquidated. Such massive liquidations suggest the market was overly bullish, and the price drop forced traders to exit. 

While some were forcibly pushed out, others chose to close positions to avoid liquidations. For that reason, $1.68 billion flowed out of the market compared to $1.45 billion in futures inflows. 

As a result, Futures Netflow dropped 350% to -$164.3 million, reflecting intense sell-side activity. Such massive exits suggest increased deleveraging, signaling market fear as investors anticipate a further downtrend.

Interestingly, with longs facing such high liquidation levels, most traders have largely shifted to shorting the market. In doing so, the altcoin’s Long Short Ratio plunged to a low of $0.96, holding below 1, for seven consecutive days.

The ratio holding below 1 for an extended period suggests that traders are extremely bearish and anticipate further decline.

Is $80 support at risk?

Solana’s market structure is extremely weakened, largely driven by extensive pressure on the Derivatives market.

As such, the downside momentum has strengthened significantly. Looking at DMI, ADX Smoothing, the positive Index sits below both -DI and ADX.

When +DI sits below both, it is a clear signal that bearish pressure is dominant in a strong trend. Thus, sellers dominate the market, further extending downward momentum.

At the same time, the altcoin’s Awesome Oscillator (AO) has remained red and declined for four consecutive days. Currently, AO sits around 0.53, indicating weak market momentum.

With the momentum downside strengthened, SOL could breach the $83 support and drop towards $81.

However, the spot side still gives the market hope, and investors are buying more during this market dip. In fact, even with SOL on a decline, Spot Netflow has remained negative for eight consecutive days.

At press time, Netflow sits around -$2.8 million, down from -$15 million in the previous period. This is a clear sign of aggressive spot accumulation.

If spot demand can absorb the pressure, Solana could handle the conditions and target $90 again.

Final Summary

• Solana [SOL] dropped to a low of $83, erasing all May gains amid extreme bearish pressure in the futures market. 
• The Solana market weakened further as investors closed their futures positions, but spot market demand remains, giving SOL a chance to recover.