Solana Nears Breakout Amid Short Squeeze Hopes
Key Takeaways
- Solana (SOL) is approaching a key resistance zone between $176 and $188 USD.
- Many short positions above $170 USD could be liquidated in the event of a breakout.
- Technical indicators and market sentiment suggest a potential upward movement.
- Development activity remains stable – a positive signal for long-term investors.
Short Positions Are Building – Is a Short Squeeze Coming?
Solana is currently trading at around $171 USD – a 2.14% increase over the past 24 hours. This places SOL just below a strong resistance zone between $176 and $188 USD. Notably, this area contains many short positions – bets on falling prices.
According to liquidation data, over $1.72 million USD worth of short positions were liquidated on May 18 alone. In contrast, long positions were largely unaffected. Should SOL break through the resistance zone, more short liquidations could follow. This would drive the price further upward – a classic short squeeze scenario.
Funding Rate Turns Positive – A Shift in Trader Sentiment
Another indicator of a possible trend reversal is the funding rate on Binance. This metric shows whether traders are willing to pay for long or short positions. After several weeks in negative territory, the rate has now turned slightly positive at 0.008%. This means more traders are betting on rising prices and are willing to pay for the privilege.
Although the value remains low, it signals decreasing skepticism toward Solana. If this trend continues, additional long positions could be opened, further supporting the upward trend.
Social Attention on the Rise – Retail Investors Are Coming Back
Solana’s so-called Social Dominance has risen to 5.18%. This metric measures how often Solana is mentioned on social media compared to other cryptocurrencies. An increase indicates that retail investors are showing renewed interest – often an early sign of an upcoming price rally.
While the current value is still below the March high, the trend shows that the community is becoming more active again. If the price breaks through the resistance zone, social interest is likely to increase further.
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Technical Analysis: Fibonacci Levels and MACD Point to Breakout
From a technical perspective, Solana stands on solid ground. The price is holding above the 1.618 Fibonacci extension level at $163.16 USD – an important support level. At the same time, the MACD (Moving Average Convergence Divergence) is showing signs of a potential bullish crossover in the coming days, indicating growing momentum.
If SOL breaks above $176 USD, the next price targets could be $189.88 and $198.13 USD – both additional Fibonacci levels. The technical indicators support the scenario of an impending breakout.
Development Activity Remains Stable – Strong Fundamentals
It’s not just the price action that speaks in favour of Solana. Development activity on the blockchain remains stable at a value of 23.38. This shows that developers are continuing to actively work on the network despite recent market volatility.
For long-term investors, this is an important signal. A strong developer base ensures that the project continues to advance technologically – regardless of short-term price fluctuations.
Our Assessment
Solana is at a critical juncture. The combination of technical signals, improving market sentiment, and stable development activity points to a potential price rally. In particular, the large number of short positions above $170 USD could lead to a short squeeze if a breakout occurs – a scenario that could quickly push the price toward $190 USD.
Keep an eye on the resistance zone between $176 and $188 USD. A clear breakout could mark the beginning of the next upward movement.
Sources
- CoinGlass
- Santiment
- TradingView
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