Solana’s Bearish Market Structure and Potential Selling Pressure
Solana’s [SOL] bearish market structure continued, with prices making a series of lower highs to extend sellers’ advantage. Prevailing market conditions and bears’ crack of the $20 support level further weakened the altcoin.
Bitcoin’s [BTC] oscillation between $26k and $27k has introduced a high level of caution by investors, with traders looking to avoid being caught out by substantial price movements.
The sustained selling pressure on Solana took it to the major support level of $20 on 8 May. Bulls mounted a strong defense of the level for a 2-week period before finally caving to the bearish momentum. Another bullish attempt to rally was pushed back at the new resistance level of $20. This introduced further lows, with SOL trading at $19.26 as of press time.
Meanwhile, the on-chart indicators didn’t give any clear signals. The Relative Strength Index (RSI) remained under neutral 50, highlighting the lack of buying pressure. The On Balance Volume (OBV) stayed flat while the Chaikin Money Flow (CMF) hovered over the zero line, reiterating the indecision by market speculators on capital inflows for SOL.
Brief Respite and Future Outlook
A look at the four-hour timeframe showed that price briefly bounced off the minor support zone at $18.86 over the past two days. Based on SOL’s historical price movement, this might be a brief respite before the bearish momentum continues.
A bullish rally for Solana could be triggered by Bitcoin surging toward $30k again. Else, bulls might need to wait for the price to reach the next major support level at $16.66 to mount a significant reversal.
Open Interest and Selling Pressure
The Open Interest (OI) data on Coinalyze suggested that Solana could experience more selling pressure in the short term. A look at the OI on the four-hour timeframe between 12 May and 25 May showed that it had risen from $205.5M to $246.5M. This signaled the continuation of the existing bearish trend.
The liquidation data from Coinglass echoed the prevalent bearish bias. Long positions worth $1.92M were liquidated over the past 48 hours, compared to just $272.76k worth of short positions.
