Solana (SOL) is the fifth largest cryptocurrency by market capitalization, with its daily chart sending warning signals of potential downward momentum. On December 3, 2024, the sentiment across the cryptocurrency space appears bearish, and assets are struggling to gain traction.

Solana's liquidation barrier

Data shows that Solana bulls have increased the token's price by over 34% in the past 30 days. This surge in price has significantly increased the token's market capitalization to $106 billion.

It is worth noting that in the short term, shorts may be liquidated around $247 to $252. However, there are still a significant number of long positions unliquidated over the past month, with levels below $210 and $200 being the highest concentration for liquidations across exchanges. There is also a final short position around $267.

For those planning to go long on the above position, this does not mean SOL is a viable option, as an increase in liquidation volumes typically leads to price adjustments.

$159 million SOL outflow

On-chain analysis company Coinglass states that despite the bleak outlook, whales and institutions have shown strong confidence and interest in this altcoin. SOL's spot inflow/outflow data shows that exchanges have witnessed a significant outflow of SOL worth $159 million over the past four days.

In the context of cryptocurrencies, outflow refers to whales withdrawing tokens from exchanges to their wallets, which is considered a bullish signal and suggests a possible rise in the coming days.

Considering the outflows, SOL investors seem to be potentially leveraging the current market sentiment and price drop to acquire more assets.

Solana (SOL) technical analysis and upcoming levels

During the price adjustment phase, Solana (SOL) failed to hold the key support level and fell below the $227 mark. According to expert technical analysis, after reaching an all-time high, SOL entered a consolidation phase, forming a bearish head-and-shoulders price pattern.

In today's bearish (or price adjustment) stance, SOL has broken below the neckline of the bearish pattern and is trying to close beneath it. Based on recent price movements and historical momentum, if the daily closing price of SOL is below $226, it is highly likely to drop 10% to the $200 mark in the coming days.

On the positive side, SOL is trading above the 200-day Exponential Moving Average (EMA) on the daily chart, indicating an upward trend. Meanwhile, the Relative Strength Index (RSI) suggests a potential upward rebound in the coming days, as its value approaches the oversold area.

Solana has experienced a price adjustment of over 5% in the past 24 hours. As of this writing, the token is trading at $224.94. A possible reason for the price drop could be the increase in selling pressure.

Analysis shows that during the recent bullish days for SOL's price, there was a surge in SOL inflows into CEX. This can be seen as a profit-taking move, leading to a correction.

However, when SOL's price drops to $210, investors may have a good opportunity to re-enter the market. Since many stocks are liquidated at this level during bear market rebounds, SOL may bounce back from there. The declining long/short ratio of Solana clearly indicates an increase in short positions in the market—an indication of rising bearish sentiment.

In fact, based on SOL's daily chart, the likelihood of it dropping to $210 is high. The token recently fell below the $237 support level.

The Relative Strength Index (RSI) has also shown a decline, indicating selling pressure, which further supports the previously mentioned possibility of SOL retreating to $210.