Why does SOL have a 30% risk of decline after losing support from major investors?

The cryptocurrency market is experiencing a deep correction phase, creating significant selling pressure on Solana (SOL) amid increasingly pessimistic investor and trader sentiment.

In this widespread sell-off wave, SOL is most severely affected as it loses an important support level at $118 – a threshold that has been strongly defended since March 2024.

Contributing to the bearish outlook, a newly created wallet sent 2 million USDC on the DEX Hyperliquid and established multiple short positions. According to the on-chain cryptocurrency tracking tool Onchain Lens, this clearly reflects the current market sentiment.

A detailed analysis of this whale’s activity shows a massive short position on SOL worth $6.15 million opened at a price of $122.91. This sell-off is not limited to the cryptocurrency market but is also observed on Wall Street.

According to the on-chain analysis platform SoSoValue, US-based Solana spot ETF funds recorded a net outflow of $2.22 million, signaling that institutional and retail investors are withdrawing capital from the underlying asset.

Source: SoSoValue Both developments demonstrate the market sentiment towards Solana, with the direct impact reflected through price volatility.

Technical analysis and key price levels

Currently, SOL has plummeted 6.65% in the past 24 hours, trading around the $115 mark. Despite the downward trend, market activity has surged significantly with SOL trading volume increasing by 105% to $7.60 billion during the same period, reflecting strong interest from traders and investors.

Price chart analysis shows that SOL has lost one of its strongest support levels at $118 – a level maintained since March 2024. On the weekly chart, this asset had recovered from this support more than 10 times, but now SOL can no longer defend this critical level.

Source: TradingView Daily chart analysis indicates that SOL is likely to continue its sharp decline, with a 30% correction target down to the $78 zone in the near future. However, this scenario is only confirmed if trading remains below or the daily candle closes below the $118 level.

Source: TradingView Technical indicators, including the 50-day EMA and the ADX index, support the bearish view on SOL. Notably, SOL is currently trading below the 50-day EMA, confirming the short-term downtrend of the asset.

Meanwhile, the ADX – a tool measuring trend strength – has risen to 33, surpassing the important threshold of 25, indicating that SOL is in a strong directional trend.

Derivatives market positioning and trader sentiment

From a derivatives market perspective, traders are showing a clear bearish stance. Data from CoinGlass shows traders are closely monitoring two key levels: the support at $112.8 and resistance at $120.2.

At these levels, traders have established significant leveraged positions. The total value of leveraged short positions reaches $55.15 million, while long positions are considerably larger at $241 million.

Source: CoinGlass This distribution of positions reflects current market tension, with traders preparing for strong volatility in both directions, and also demonstrates the cautious outlook of the trading community towards SOL in the current phase.