Recently, Solana (#sol ) has shown a significant pullback. After encountering resistance around $93, SOL faced strong downward pressure and ultimately failed to hold the $90 support, reaching a low of $88. As of the time of writing, the SOL price is $88.2, down about 4.5%, and market sentiment appears significantly weak. Some analysts have taken an extremely pessimistic view of the future market, believing that a significant adjustment may be on the horizon.
1. The bearish flag pattern emerges, the market may face a significant decline
Analysts point out that SOL has recently formed a typical bearish flag pattern. Historical data indicates that the last time this pattern appeared, SOL dropped from about $152 by 56%, reaching a low of $67. The recurrence of the current pattern has made the market vigilant about future trends.
If this trend fully forms and breaks through the current resistance level, SOL's price may face a drop space of $40 to $45. This undoubtedly raises alarms for investors.
II. The Derivatives Market Turns Bearish
One of the direct reasons for the price drop is that traders in the derivatives market have turned bearish and are actively closing positions. CoinGlass data shows that as of the time of writing, the outflow of futures funds has surged to $2.13 billion, while inflows have decreased to $2.02 billion, turning net fund inflow negative, plummeting by 547% to -$10.3 million.
Meanwhile, SOL's open interest contracts fell by 2% to $5 billion, with a liquidation amount exceeding $8 million, of which longs were liquidated for $6 million. This indicates market weakness, with traders reducing positions or even closing out. Historical experience shows that when this bearish sentiment persists, it often leads to further price declines.
III. Technical Indicators Also Release Warning Signals
From a technical perspective, SOL's future major trend indicators also show the presence of downside risks. Analysis indicates that prices may dip to $75, and in the most pessimistic scenario, even drop to $57. Meanwhile, the ADX indicator shows a weakening trend, and DMI is approaching a death cross. The emergence of the death cross signal will further confirm that the market's downward momentum is still accumulating.
These technical signals combined with market fund flows force investors to remain vigilant about short-term risks.
IV. ETFs Become a Stabilizing Line for the Market
Despite significant withdrawals from the futures market and longs being liquidated, Solana's spot ETF still maintains fund inflows, providing a 'lifeline' for the market. Over the past few days, the SOL spot ETF has avoided net outflows, with one day even achieving a break-even point, recording about $4.5 million in net inflows.
Although the inflow of ETFs is not large, stable fund inflows have effectively alleviated potential selling pressure. Meanwhile, the net flow of spot has remained negative, dropping to -$35.5 million, the lowest in nearly two months. This also means that some investors are buying on dips, providing additional support for the market.
Therefore, if spot demand, especially ETF demand, remains stable in the short term, SOL is expected to avoid a significant decline and may first drop to around $85 before gradually rebounding to $93.
V. Summary
Recently, Solana dropped by 4.5%, falling below the $90 support level, hitting a low of $88. Short-seller pressure in the derivatives market has increased, and technical indicators show a weakening trend, with a bearish flag suggesting potential significant downside space.
However, the continuous inflow of spot ETF funds provides stable support for the market, potentially avoiding extreme declines in the short term. Prices may stabilize around $85 before seeking opportunities to rebound to $93.
Overall, #solana is at a critical stage of the long-short game, with short-term risks still present. Investors should pay attention to changes in fund flows and key technical support levels.
Disclaimer: The content of this article is for reference only and does not constitute any investment advice.