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"SOL Bulls Accumulate Despite Bearish Market, Short Sellers Bet on Short-Term Gains"

AInvestSaturday, Feb 1, 2025 3:22 pm ET
1min read

Solana (SOL), the native token of the Solana blockchain, has garnered significant attention from crypto enthusiasts despite the bearish market sentiment. As of February 2, 2024, the overall cryptocurrency market has witnessed a notable price decline, but SOL has reached a crucial support level with a history of impressive price reversals.

On-chain analytics firm CoinGlass reported that long-term holders and investors have been accumulating SOL tokens, with exchanges witnessing a significant inflow of over $100 million worth of SOL tokens in the past 48 hours. This outflow from exchanges indicates potential accumulation, and given the current market sentiment, it seems to be an ideal buying opportunity. This could create buying pressure and trigger a further upside rally.

However, intraday traders appear to be moving in the opposite direction from crypto whales, capitalizing on the current market sentiment. Data shows that short sellers are significantly bet on the short side, with $236.30 being a level where short sellers are over-leveraged, holding $175.50 million worth of short positions. Meanwhile, $223 is another over-leveraged level, where bulls hold $46 million worth of open long positions.

When combining this data, it appears that investors and long-term holders are betting on long-term gains and see this as an opportunity, which explains the recent potential accumulation. Meanwhile, short-sellers seem to be taking advantage of the current market sentiment and betting on short-term gains.

SOL is currently trading near $224.15 and has experienced a price drop of 3% in the past 24 hours. During the same period, its trading volume dropped by 20%, indicating lower participation from traders and investors compared to the previous day.

According to expert technical analysis, SOL appears bullish despite the recent accumulation. It has formed a bearish inverted cup and handle pattern on the daily time frame and is poised for a neckline breakdown. Based on the recent price action, if SOL breaches the neckline and closes a daily candle below $220, there is a strong possibility that SOL could witness a price drop of over 14% to reach the next support level at $190. However, this bearish thesis will only hold if SOL closes a daily candle below the neckline; otherwise, it may fail.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.