According to Cointelegraph, Solana's (SOL) price has decreased by 10% on the weekly chart, nearly erasing its gains from the previous week. This decline is part of a broader market correction, with the total crypto market cap falling by 7.8% as of August 28.
Since April, Solana has struggled to initiate a new uptrend, with its price action consolidating sideways for the past five months. Despite the Solana-based PayPal stablecoin (PYUSD) reaching a market cap of $1 billion, on-chain activity and demand for Solana have declined in recent weeks.
Solana's open interest (OI) has dropped by 12% over the past 24 hours. The 16% price drop in August has coincided with a weakening derivatives market, with OI falling from $2.83 billion to $2.08 billion. Liquidations totaling over $15 million in the past 24 hours have further increased bearish pressure, with over $13 million in long positions being wiped out.
Another factor contributing to SOL's bearish trend is negative spot net flows over the past month. Solana has experienced $526 million in spot selling volumes, the third largest among the top ten crypto assets. While spot net flow is negative for all assets, Solana has faced the most significant selling pressure relative to its market cap.
For instance, Bitcoin's spot negative net flow is nearly three times higher than Solana's, but Bitcoin's market cap is 17 times larger. This indicates that spot investors are selling more SOL relative to BTC.
Since April, Solana has oscillated within a range of $162 to $127, acting as an accumulation zone. The altcoin has tested both the upper and lower limits of this range multiple times over the past five months. After a flash crash in early August, Solana tested the upper limit of $162 twice, raising traders' hopes for a new bullish trend. However, this did not materialize, and based on historical market behavior, SOL may retest $127 in the coming days.
If the SOL/USD pair can close the daily candle above $140 next week, a drop to $127 might be avoided. Additionally, support from the 200-day EMA suggests that SOL has a chance of recovery.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
