Solana (SOL) Faces Intense Bearish Pressure, Struggles to Hold Critical Support Level of $225

Solana (SOL) continues to face intense bearish pressure, shedding 16.78% from its local high of $264.36, with its prices currently hovering near the critical support level of $225.

Solana (SOL) price analysis reveals a battle at a critical support level as the cryptocurrency continues to face bearish pressure. Despite a period of bullish enthusiasm, signaled by high OI-Weighted Funding Rates, fading optimism and a total liquidation of $15.37 million indicate the current strength of bearish momentum.

Solana (SOL) Prices Continue to Battle at Critical Support Level

Solana (SOL) is facing relentless bearish pressure, evident in a 16.78% decrease from its recent local high of $264.36. Currently, SOL prices are hovering around a critical support level of $225.

The cryptocurrency has been locked in a descending channel, marked by a persistent downtrend, as depicted by the chart’s trendline below. This trendline has prevented price action from moving up and kept SOL under selling pressure.

The current struggle seems to be centered around a battle between buyers and sellers, with $225 emerging as the immediate demand zone.

Historically, this level has served as strong support, but if breached, SOL could spiral further down to $215.77, the 23.6% Fibonacci retracement level.

SOL Key Technical Levels and Indicators

The Fibonacci retracement tool reveals critical levels dictating the coin’s price action. For instance, the 38.2% retracement level at $225.05 aligns closely with the current support zone, making it a pivotal area to hold.

On the upside, the 50% retracement tier at $232.56 aligns with key resistances, including the EMAs for 20, 50, 100, and 200 periods.

Currently, SOL trades below all these EMAs, reinforcing the bearish outlook. Moreover, the Relative Strength Index sits at 36.06, signaling that SOL is nearing oversold conditions.

While this suggests that the bearish momentum may be overextended, it also leaves room for further downside if selling pressure persists.

However, the 200 EMA at $219 is another crucial support level to monitor in case the $225 level fails. A breach below this area could further trigger a swift drop to $215.77 and lower, with the descending trendline continuing to suppress upward moves.

Buyers might use this as an opportunity to recover. They could try to break above $232 and go to the $235 resistance zone. A Fair Value Gap exists above the current price, near $235, which could help price recovery if bulls get back momentum.

Solana (SOL) derivatives market unfolds as the Open Interest (OI)-Weighted Funding Rate, a crucial indicator of traders’ sentiment in the derivatives market, reveals a period of fading bullish enthusiasm.

This indicator provides insight into the average funding rate for each cryptocurrency, adjusted by the Open Interest for different contracts. A positive funding rate signifies an excess demand for long positions (bullish), while a negative rate indicates a higher demand for short positions (bearish).

As observed in the graph above, Solana’s OI-Weighted Funding Rate soared to a high of 0.06% on November 24th, indicating strong bullish sentiment as traders anticipated further upside and positioned themselves accordingly.

However, as SOL’s price tumbled from its high of $264, funding rates shifted toward neutral, indicating fading optimism among leveraged traders. In addition, the SOL cryptocurrency witnessed a total liquidation of $15.37 million, highlighting the amplified volatility.

Of these, $14.47 million came from long liquidations, implying losses for overleveraged bullish traders who failed to anticipate the downtrend. In comparison, short liquidations totaled $908,030, demonstrating the current dominance of bearish momentum in the market.