Solana (SOL) has faced a steep decline of over 20% in the past week, primarily driven by a shift in market sentiment.
Despite this downturn, Solana’s price experienced an 18% increase, testing resistance at $140 amid a broader market recovery. Although sentiment has slightly improved, ongoing liquidations in the futures market may still threaten this recovery.
Factors influencing Solana’s price movements
A significant factor influencing Solana’s price is the high level of futures liquidations. Over the past 24 hours, $17.07 million in SOL futures were liquidated.
Solana derivative data analysis. Source: Coinglass
This includes $7.25 million from long positions and $9.83 million from short positions, indicating market pressure and heightened volatility. The imbalance suggests initial upward pressure forcing short liquidations, followed by ongoing downward pressure due to long liquidations.
Another critical factor is the relationship between open interest and trading volume. Open interest increased by 12.87% to $2.08 billion, reflecting heightened speculation. However, trading volume decreased by 54.02% to $15.30 billion, indicating low trading activity amidst growing interest.
This combination typically points to indecision among investors, which can lead to sudden price swings as positions are adjusted or liquidated.
The long/short ratios also provide insight into market sentiment. The 24-hour long/short ratio is 1.0036, showing near balance. However, more detailed data from exchanges like Binance and OKX indicate a slightly bullish sentiment, with long positions dominating, particularly among top traders.
Additionally, liquidation metrics over various time frames highlight market stress. Significant liquidations across one-hour, four-hour, 12-hour, and 24-hour periods shows persistent volatility and price pressure.
Solana’s performance in Decentralized Finance (DeFi)
Despite the recent price decline, Solana has demonstrated strong performance in the decentralized finance (DeFi) sector.
According to DeFiLlama, Solana outpaced Ethereum (ETH) in overall trading volume for July, leading daily trading on 17 days.
Solana’s DeFi protocols accounted for 30% of all crypto decentralized exchange (DEX) volume, processing $56.849 billion in transactions compared to Ethereum’s $53.867 billion.
Solana also boasts over $4.4 billion in total value locked (TVL) and a stablecoin market cap exceeding $3.5 billion, driven by expanding meme coin activity.
ChatGPT-4o Solana price prediction
In this context, Finbold has leveraged OpenAI’s advanced artificial intelligence (AI) platform, ChatGPT-4o, to offer insights into how Solana is likely to trade amid these conditions.
Considering key factors influencing Solana’s future price trajectory, ChatGPT-4o predicts two primary scenarios based on current market data and technical analysis.
In a conservative scenario, Solana is expected to trade between $130 and $135 if negative sentiment and liquidations persist.
ChatGPT-4 investment outlook on Solana. Source: ChatGPT-4o / Finbold
However, in an optimistic scenario, if Solana can break through and sustain above the $146 resistance level, the price could potentially rise to $166, driven by improved market sentiment and strong DeFi performance.
In conclusion, Solana’s price movements are currently influenced by high levels of futures liquidations, increased open interest with decreased trading volume, mixed market sentiment, and strong performance in the DeFi sector.
Investors and traders should monitor these factors closely to gauge potential price changes. If Solana can maintain support at $135 and overcome resistance at $146, there is potential for significant upward movement towards $166.
However, continued negative sentiment and market pressure could keep the price in the $130 to $135 range.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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