Solana (SOL) Futures Market Signals Increased Risk of Sub-$130 Prices

The price of Solana has experienced notable fluctuations in the last week, largely attributed to ongoing market challenges. This instability has generated a decline in the sentiment within its futures market, suggesting that leveraged traders are shying away from optimistic positions.

This pervasive lack of confidence raises concerns about further downward movements, with SOL potentially slipping below the crucial $130 threshold in the upcoming days.

Solana Faces Challenges as Traders Withdraw

The negative funding rate associated with SOL indicates diminishing bullish sentiment among futures traders. Data from Coinglass reveals that SOL perpetual futures have registered a negative funding rate for the last three days, implying that short sellers are currently incurring costs to maintain their positions, currently set at -0.0060%.

The funding rate is a periodic fee exchanged between long and short traders in perpetual futures contracts, aimed at aligning the contract price with the spot market. When this rate is negative, it denotes that short sellers (those anticipating a price drop) are subsidizing long traders, thus reflecting a bearish outlook in the market.

As a result, a growing number of traders are betting on a price decrease, reinforcing the downward pressure on Solana's value.

Furthermore, the decline in confidence amongst SOL futures traders is echoed by a significant drop in open interest, currently resting at $3.94 billion—a 19% decrease since the start of March.

Understanding Open Interest in Solana Futures

Open interest measures the total number of active futures contracts that remain unresolved. A downward trend in open interest, particularly during a bearish price phase, signifies that traders are exiting their positions without initiating new ones, signaling a lack of belief in a near-term price recovery for SOL among futures traders.

Are Solana Bulls Losing Their Grip? The Risk of Dropping Below $130

Currently, SOL is priced at $137.70, hovering slightly above a support level of $136.62. As the bullish sentiment weakens, this support may be jeopardized and could turn into a resistance zone.

If this scenario unfolds, SOL's value could potentially drop below $130 and settle at around $120.72.

Conversely, should bullish forces regain momentum in the SOL market, this bearish outlook may be rendered obsolete, potentially enabling the price to climb back up to $182.31.