NOIDA (CoinChapter.com)—Solana (SOL) has been experiencing a significant downturn, with the token’s price down by nearly 5% in the last seven days. Several bearish cues could be the reason why Solana price is down today.
Though the wider crypto market also remained bearish, SOL’s performance was the worst among the top 10 crypto tokens in the 7-day period.
SOL price failed to hold above key support levels around $18 and continuing its descent to the current level of approximately $15. This trend is evident in the trading patterns and market behavior surrounding the SOL token, with trading volumes spiking during sell-offs, indicating strong selling pressure.
Bearish SOL/BTC and SOL/ETH Pairs Could Be Why Solana Price Is Down
The SOL/BTC and SOL/ETH pairs have provided clear bearish signals for the Solana token. In the SOL/BTC chart, Solana has been underperforming relative to Bitcoin, consistently making lower highs and lower lows.
The pair recently dropped below the 0.0021 BTC support level and currently trades around 0.002 BTC. Moreover, the downtrend suggests that investors are increasingly favoring Bitcoin over Solana, moving their capital to what they perceive as a more stable and reliable asset.
Similarly, the SOL/ETH pair shows a similar trend, with Solana losing ground against its competitor blockchain, Ethereum. The pair has fallen from a high of 0.058 ETH in May to its current level of 0.036 ETH, marking a significant decline.
The hype around the Spot ETH ETF launch could be a key driver in attracting buyers to the Ethereum token. Investor preference is easy to spot from CoinShares’ weekly report, which highlighted that ETH-based investment vehicles attracted over $13 million in inflows in the week ending June 14.
In the same timeframe, SOL funds saw outflows of $0.2 million.
The consistent downward trajectory indicates that traders are opting for Ethereum, likely due to its stronger market position and recent network upgrades. The preference for ETH over SOL suggests investors seek safer bets amidst market volatility.
Funding Rate and Open Interest Charts Reflect Bearish Outlook
Moreover, the funding rate and open interest charts reinforce the bearish outlook for Solana. The open interest in SOL futures has seen a notable decline from over $3.5 billion in mid-May to under $2 billion currently, correlating with the recent price drop.
High open interest levels previously indicated speculative activity, but the recent reduction suggests that traders are closing positions or facing liquidations, leading to further price pressure.
Moreover, the funding rate has shown significant fluctuations, with recent spikes in negative territory. It averaged around 0.01% in May and dipped to a low near -0.005% in June.
Negative funding rates indicate that short positions are paying long positions, reflecting a bearish sentiment among traders. The shift towards short positions suggests that market participants are betting on further declines in SOL’s price.
Since June 18, SOL futures contracts have seen nearly $42 million in long liquidations, as compared to just $11.5 million in short liquidations, underscoring the bearish pressure against the token.
SOL Price Breaks Below Bearish Pattern
Meanwhile, the SOL price has broken out below a bearish technical setup called the ‘descending triangle pattern,’ marking another reason why the Solana price was down today.
Market analysts often consider the descending triangle a bearish continuation signal.
The configuration features a downward-sloping upper trendline, which gradually reduces the price action’s highs, and a flat lower trendline, which is a consistent support level the price finds difficult to break.
Moreover, the pattern suggests that selling pressure is intensifying, leading to successively weaker rallies. In this setup, the potential price target is typically gauged by the maximum height of the triangle at its widest point.
Hence, SOL price is yet to confirm the breakout from the descending triangle pattern. However, confirming the bearish setup might result in the SOL price dropping over 32% to reach the projected price target near $84.4.
