- Solana breaches key support at $61, raising concerns among investors.
- Open Interest at $983 million signals heightened market participation.
- Cryptonary advocates Dollar-Cost Averaging at $52 amid potential downturn.
In a comprehensive analysis by Cryptonary, Solana’s native token, SOL, is currently facing a critical juncture as it undergoes a challenging examination of its key support levels. The once sturdy upward trend for $SOL has encountered disruptions, causing apprehension among investors and traders.
Cryptonary’s technical analysis indicates that Solana has breached its horizontal support at $61 and, more significantly, has fallen below its primary uptrend line. The spotlight is now on the immediate support at $59, and a failure to sustain this level could trigger a more substantial downward movement. Analysts at Cryptonary suggest that potential retreats to $56 and even $52 could be in the cards if the $59 support is compromised.
Brace for impact as SOL tests key support$SOL has lost its main uptrend. If support can’t hold at $59, it could pull back to $56 and possibly $52.
Positioning is balanced, but OI is at highs, last seen in April 2022. A flush out on the cards means – price down.
— Cryptonary (@cryptonary) December 5, 2023
Digging into market mechanics, it becomes evident that while trader positioning appears balanced, Open Interest (OI) has soared to heights not seen since April 2022, currently standing at $983 million with a slight decrease from its peak at $993 million. This heightened OI indicates significant market participation, but analysts caution that a flush-out may be looming, especially if a drop in price prompts a reduction in Open Interest.
Further analysis of market dynamics reveals a reset in the OI-Weighted Funding Rate, dropping from 0.080% to a more neutral 0.012%. This shift suggests a more even balance between Longs and Shorts in the market, signaling a potential rebalancing of positions.
Cryptonary’s assessment indicates that while Open Interest remains elevated and could be due for a flush-out, the positioning of Longs and Shorts is now more evenly matched. Turning attention to technical analysis, charts suggest a potential for further downside in price, particularly if Solana breaches the critical $59 support. Such a scenario could lead to the liquidation of Long positions, resulting in a reduction of Open Interest.
In light of these observations, Cryptonary anticipates a continued downward trajectory for SOL, especially if Bitcoin (BTC), the leading cryptocurrency, fails to register a significant upward move. The analysts advocate a strategic approach, expressing consideration for Dollar-Cost Averaging (DCA) into $SOL at the $52 level if market conditions align with this favorable price point. Investors and traders are advised to remain vigilant as Solana faces its support stress test in the volatile cryptocurrency market.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.