After reaching a three-year high of $248 on Monday, the price of Solana dropped to $230 on Wednesday, a decline of 8%.
From 9.9 billion to 6.7 billion SOL, a 52% decline in market demand for Solana was recorded in the last 72 hours.
Funding rates fell by half in the futures markets, while open interest increased by $630 million, indicating a surge in short positions.
After failing to break over the $250 barrier level on Monday, the price of Solana has fallen by 7%. Important trade indicators have turned negative, which means bears may push back the all-time high breakout goal.
Following an unsuccessful effort to break out of its all-time high, Solana is now retracing around $230.
As demand for memecoins increased and good rumors around VanEck's SOL spot ETF applications circulated, the price of Solana reached a three-year high of $248 on November 14. The price of Solana, which set a record high of $259 in November 2021, came near five percent of being surpassed during the rise.
On Wednesday, Solana fell 7% from last week's high, trading as low as $230 on the daily period, as shown in the chart above.
Since its price hasn't moved in the past two days, Solana has fallen to fourth place, behind XRP.
In the wake of the price adjustment, demand for SOL in the market fell 52%.
Important trading indications show that the positive momentum is fading, even if Solana still has reasonably strong support levels.
Supporting this claim, the following Santiment chart displays the daily trading volume of SOL coins.
Trading volume of more over 9.9 billion SOL occurred on November 17, the second-highest day volume in the last 90 days, beginning on August 5, as seen in the image above.
Nevertheless, Solana's market demand has dropped significantly after defeat at the $250 resistance level.
Investors sold 6.7 billion SOL on November 19, a 52% decrease from the previous day's trading volume, according to the most recent statistics.
During a price consolidation period, a precipitous drop of this magnitude could trigger pessimistic sentiment for two main reasons.
To start with, it may indicate that short-term traders are losing faith in the market, which might slow the rising price trend.
If demand doesn't pick up steam soon, Solana might be in for further price drops, particularly if volumes continue to fall in the days to come.
Funding rates plummet 50%, putting short traders under intense pressure.
Short sellers of Solana are taking calculated steps to reclaim market dominance, even though trading volumes have fallen by 52% due to the current consolidation period.
Below are some charts from Coinglass that show the movements in open interest and funding rates. These are two important measures for tracking the mood of short-term speculative traders.
Open interest measures the overall amount of money invested in the solana futures markets, whilst funding rate data illustrates the direction of changes in fees paid by long and short position holders, respectively.
Funding rates for Solana compared to Open Interest (OI) | SOLUSD
The financing rate for Solana fell from 0.04 on Monday to 0.02 at the time of publishing on November 20, which occurred at the same time as a $630 million rise in open interest (as seen above).
The bullish traders have reduced the leverage on their long SOL bets by 50% in the last two days, as seen above.
An rise in open interest and a decrease in funding rates indicate a flood of short positions.
Solana price's chances of reaching a new all-time high may be dashed if most short-term speculative traders are banking on more downswings.
Forecast for Solana price: $230 support might be threatened
Key technical indicators suggest that the $230 support level may be in jeopardy, and the Solana daily chart displays mild-bearish signs, reflecting the bearish dominance of the futures markets.
To start, a large inward tightening of the Bollinger Bands (BB) indicates less volatility, which often comes before a big turnaround.
Predictions on the Solana price | SOLUSD
Another indicator of a deteriorating trend, Solana's Average Directional Index (ADX) has fallen to0.81, lending credence to the negative forecast. The bullish momentum is fading, which is adding fuel to the fire that Solana would have a hard time recovering from its recent highs.
The next key support for Solana pricing, which is $202, is aligned with the 50-day Simple Moving Average (SMA). If sellers take additional control, the price might lose the $230 support and slide toward this level.
The SOL price has to close over $230 in order to go back on the uptrend.
Under these conditions, prices may rise over $240 again if trade volumes spike. But if $230 isn't held, bearish sentiment will be confirmed, and we might see a return to deeper support zones.