Solana Falling: Negative Sentiments in Derivatives Indicate Greater Risk for SOL

Solana (SOL) continues to face market pressure, trading below the psychological $100 level after suffering over a 15% retracement last week. Recent data indicates that most market participants are betting on an even sharper decline, while Solana’s price hovers around $82 this week. The combination of negative signals in both the derivatives market and institutional capital flows suggests that the downside pressure could intensify further in the coming days.

Derivatives Market Shows Majority Bearish Among Traders

Data from Coinglass reveals a significant shift in sentiment among Solana derivatives traders. The open interest-weighted funding rate turned negative over the past weekend, currently at -0.0080%, according to the latest figures. This negative metric is particularly revealing: it indicates that short sellers are paying longs, a classic sign that bearish sentiment dominates the market.

The ratio between long and short positions also supports this pessimistic view. With an index of 0.97 (below 1.0), more traders are betting on a decline than on a rise in SOL’s price. When this ratio turns negative, it means selling pressure exceeds buying interest, creating a unfavorable environment for any short-term recovery. This scenario often precedes cascading liquidations.

Institutional Outflows Signal Sentiment Shift

A particularly concerning development comes from Solana exchange-traded funds (ETFs). According to SoSoValue data, ETFs recorded capital withdrawals of around $2.45 million during the past week, marking the first net outflow since these instruments were launched. Although modest in absolute terms, this negative flow carries significant symbolic weight: it suggests that even institutional investors are reducing their exposure to the asset.

If these withdrawals persist and intensify in the coming weeks, there is a strong likelihood that Solana could experience an even deeper correction. Loss of institutional interest typically precedes periods of downward volatility, as it reduces support from large buyers who usually provide liquidity.

Technical Analysis Indicates Risk of Further Decline

From a technical standpoint, SOL’s situation is quite delicate. The price was rejected at the weekly resistance of $126.65 and has since fallen sharply. In the coming days, if Solana cannot close above $100, the decline could extend toward the April 7 support level at $95.26.

A daily close below this level would break an important technical support and open the door to a further retracement, potentially reaching the January 23, 2024, all-time low of $79. The daily Relative Strength Index (RSI) is extremely depressed at 25, indicating deep oversold conditions and a very strong bearish momentum. The Moving Average Convergence Divergence (MACD) also showed a bearish crossover in mid-January that remains intact, with the histogram generating red bars below the neutral line, reinforcing the ongoing downward trend.

Recovery Outlook Remains Uncertain

Although Solana’s price is technically in extremely low territory (with RSI at 25, typically signaling a potential rebound), the lack of institutional support and persistent negative sentiment in derivatives suggest that the actual bottom could be even lower. For SOL to reverse this scenario, a breakout above the weekly resistance at $126.65 would be necessary, but given the current context, this seems unlikely in the short term.