Solana’s impressive run-up could come to an end soon because of…
- SOL was prime for sell pressure now that it was overbought.
- SOL broke through long-term descending support.
The last three weeks have been quite favorable to SOL holders considering the bullish performance achieved. But recent observations suggest that the party might be about to come to an end.
If you held SOL in the second half of June, chances are that you are pleased with your decision. This was because the cryptocurrency has been on an upward trajectory from its lowest price point on 10 June. It bottomed out at $12.82 and recently surged as high as $22.46, which means it has so far rallied by over 70%.
Now the bulls have been active for about 3 weeks, the probability of sell pressure is more pronounced. There are already some indicators suggesting that SOL will likely lend favor to the bears in the next few days. For example, SOL was now overbought according to the RSI and MFI.
Can the bulls resist incoming sell pressure?
— Captain Faibik (@CryptoFaibik) July 8, 2023
SOL traders should note that this was the first time that the cryptocurrency has broken above the same resistance line significantly. It suggests that Solana might finally be about to overcome its overall downward trajectory. Possibly in favor of a relief rally. If so, the bears might fail to take over.
A surge in SOL’s onchain volume occurred in the last three days, during which the cryptocurrency’s upside extended. The volume surge suggests that retail traders have been jumping onto the trend. However, investor sentiment was still low despite a slight upside from its initial dip in the last 30 days.
While the breakout could trigger more upside, there was also a significant probability that whales might use this as a profit-taking opportunity. This was because retail demand will provide exit liquidity allowing for short-term profit-taking. Such an outcome could make for a great opportunity for short sellers.
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Interestingly, SOL’s derivatives metrics indicate that short sellers might be getting into position. Both the Binance and DYDX funding rates registered a surge in negative funding rates, which could signify that traders are executing shorts. In other words, the expectations of sell pressure are growing.
Although most of the factors mentioned above point towards a potential bearish outcome, caution is still necessary. Residue bullish momentum might still push prices higher before the eventual correction.