- Solana’s price has dropped 6% in the last 24 hours, and it faces a significant loss of nearly 10% over the past week.
- $772 million in USDT and USDC stablecoins left Solana’s blockchain within one week, highlighting investor concerns.
- Negative funding rates suggest that a short squeeze could potentially reverse Solana’s current bearish trend, offering recovery hope.
Solana (SOL) continues to experience a downturn, down 6% in the last 24 hours, reaching $184. This decline is in line with the broader crypto market, which has seen losses of 1.22%. Solana’s weekly losses are even more significant, dipping nearly 10%. This price drop is tied to a decline in on-chain activity within the Solana ecosystem. Over the past two weeks, the number of wallets holding over 100 SOL has fallen by 2.24%, from 154,653 to 151,184.
On-Chain Activity Declines Alongside Price Drop
A significant outflow of USDT and USDC stablecoins from the Solana blockchain has also contributed to the weakening sentiment. According to Ali analytics, Solana saw a net outflow of $772 million in stablecoins within a week.
In contrast, Ethereum’s USDT and USDC supply increased by $1.1 billion during the same period. This stark difference highlights Solana’s struggles, especially against Ethereum, with the SOL/ETH pair falling by over 28% since early February.
The Solana price decrease occurs simultaneously with higher open interest levels yet funding fees remain negative. Stocks engaged in short positions spend money on premiums to stockholders who operate with long positions. SOL now shows signs of being oversold because too many leveraged traders currently expect its value to decrease. The short positions risk getting liquidated when negative funding turns positive.
Solana’s Short Squeeze Potential Amid Bearish Trends
Market analysts believe the shipwreck in SOL prices at 6% was excessive because traders became excessively bearish. A potential short squeeze might occur if markets adjust because traders would close their positions leading to Solana price recovery.
SOL investors find hope that the current price drop may prove temporary based on this situation. The broad crypto market’s unstable performance will likely affect Solana’s potential price recovery during this short period.
